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ONE HUNDRED YEARS OF LAND VALUES 
IN CHICAGO 



THE UNIVERSITY OF CHICAGO PRESS 
CHICAGO, ILLINOIS 



THE BAKER & TAYLOR COMPANY 
NEW YORK 

THE CAMBRIDGE UNIVERSITY PRESS 
LONDON 

THE MARUZEN-KABUSHIKI-KAISHA 
TOKYO, OSAKA, KYOTO, FUKUOKA, SENDAI 

THE COMMERCIAL PRESS, LIMITED 
SHANGHAI 



ONE HUNDRED YEARS 
OF LAND VALUES _ 
IN CHICAGO 

THE RELATIONSHIP OF 

THE GROWTH OF CHICAGO TO THE RISE 

IN ITS LAND VALUES, 1830-1933 

BY HOMER HOYT 








THE UNIVERSITY OF CHICAGO PRESS 
CHICAGO ILLINOIS 



COPYRIGHT 1933 BY THE UNIVERSITY OF CHICAGO 
ALL RIGHTS RESERVED. PUBLISHED DECEMBER 1933 



COMPOSED AND PRINTED BY THE UNIVERSITY OF CHICAGO PRESS 
CHICAGO, ILLINOIS, U.S.A. 



To MY MOTHER 



AUTHOR'S PREFACE 

This study was undertaken because there seemed to be no compre- 
hensive data available to show the cyclical fluctuations of land values 
in any American city, and because the knowledge of the past move- 
ment of land prices seemed to me to be indispensable for any rational 
real estate investment policy. The easily accessible land valuations of 
the tax assessors that are so frequently used, in most cases, either do 
not adequately show the course of the real estate market as indicated 
by actual sales or are not available in comparable form for a sufficiently 
long period of time for this purpose. Accordingly, the most difficult 
task involved in this study was the computation of land values for the 
2ii-square-mile area within the 1933 corporate limits of Chicago for 
the period from 1830 to 1933. The records of thousands of sales were 
examined for this period, which represented the life-span of Chicago 
from its first subdivision to the present, and these sales were compared 
with the appraisals and opinions of real estate dealers. During the 
period 1910-33, the annual land- value maps of George C. Olcott were 
extensively used to supplement the reports of sales. Even with all 
the evidence that could be secured from thousands of abstracts in 
the files of the Chicago Title and Trust Company, from considerations 
reported in deeds in the files of newspapers, from appraisals, and from 
tax-assessment records, it was impossible to secure sales or valuation 
data for every type of land in every square mile in the city for the one- 
hundred-and-four-year period covered by the study. It was frequently 
necessary to make interpolations based on the trend of sales data in 
surrounding sections. Nevertheless it is believed that the results are 
substantially correct, and that they are as accurate as the nature of the 
data will permit. Those who have had practical experience with real 
estate transactions know that the same degree of certainty does not 
and, perhaps, cannot prevail in the land market as in the stock or 
commodity markets. During recurring periods of stagnation, there is 
no active real estate market, and estimates of values at such times can 
at best be only approximations. I do not pretend that I have charted 
the final and absolute value of Chicago land for every year, but I have 

vii 



viii AUTHOR'S PREFACE 

sought to obtain all the evidence that is available and to register in 
graphic form the records of sales, the opinions, and the current beliefs 
that made up the Chicago land market. 

While assuming sole responsibility for any errors and imperfections 
in this book, I desire to give credit to those whose aid and co-operation 
made this study possible. To Professor Chester Whitney Wright, of 
the University of Chicago, at whose suggestion this investigation was 
undertaken, and under whose direction it was pursued, I am greatly 
indebted both for his suggestions in the fundamental plan of the work 
and for his untiring labor in revising the manuscript. To Professor 
Harry Alvin Millis, chairman of the Department of Economics of the 
University of Chicago, I express my deep gratitude for his conscientious 
criticism and his numerous helpful suggestions. To Professor Simeon 
E. Leland, of the University of Chicago and of the Illinois State Tax 
Commission, I am greatly indebted for invaluable constructive criti- 
cism during all stages of the work and particularly on the last part of 
the chapter on the real estate cycle. Professor Garfield V. Cox also 
gave me many helpful suggestions on the real estate cycle. 

Many a member of the real estate profession has contributed a life- 
time of effort to gathering information that is presented in these pages. 
One great organization the Chicago Title and Trust Company that 
is not in the real estate business assisted this publication in many ways. 
First, it placed at my disposal its invaluable plats, maps, and the ab- 
stracts that gave records of sales for over a hundred years. Second, in 
a time of great financial stringency when real estate was extremely de- 
pressed the officials of this Company saw the practical value of a long- 
range perspective with regard to land values, and they undertook to 
arouse public interest in this volume. In a series of educational ad- 
vertisements and booklets they sought to demonstrate that historical 
research in land values tends to stabilize real estate. Third, the Chicago 
Title and Trust Company has contributed chiefly to the funds neces- 
sary for the cost of publication of this book. This is greatly appreciated. 
Of course, I am extremely grateful to General Abel Davis, chairman of 
the Board; Mr. Holman D. Pettibone, president; Mr. Kenneth E. Rice, 
vice-president; and Mr. Paul P. Pullen, director of publicity, for the 
benefits that have accrued to me directly as a result of their farsighted 
policy. I am grateful also to Mr. J. Frank Graf, vice-president of the 
Chicago Title and Trust Company, for his services in procuring for me 



AUTHOR'S PREFACE ix 

the plats and abstracts of his Company, and to Mr. K. L. Van Sickle 
of the Chicago Title and Trust Company for his invaluable appraisal 
data. I am greatly indebted also to Mr. Carroll Dean Murphy and Mr. 
Frank R. Schwengel of the firm of Carroll Dean Murphy, Inc., for 
their aid in preparing the book for publication. 

Other civic groups interested in urban land problems have given me 
the fullest co-operation. I desire to express my appreciation for the 
assistance given by Mr. E. L. Bailey, of the Chicago Regional Planning 
Association, particularly in the case of studies in lots subdivided in 
the Chicago Metropolitan Area. I also want to thank Mr. Hugh E. 
Young, of the Chicago Plan Commission, for allowing me to inspect his 
large maps on the blighted area. Mr. J. V. Sullivan, of the Chicago 
Surface Lines, furnished me the material for the transportation maps. 

The county assessor, Mr. J. L. Jacobs, by whom I have been em- 
ployed for statistical work in connection with the 1931 assessment of 
real estate in Cook County, has given me great assistance. In his untir- 
ing efforts to make an honest and correct assessment of land and build- 
ings in Cook County in 1931, he secured the co-operation of the leading 
real estate men in the city and through his efforts I was able to secure 
the benefits of his voluminous records and also the advice and criticism 
of men with long experience in the real estate profession. I am particu- 
larly indebted also to members of Mr. Jacobs' staff, with whom I have 
been pleasantly associated: Mr. Walter R. Kuehnle, chief of the Real 
Estate Division; Mr. F. A. Schepler, chief of the Land Division; Mr. 
Benjamin Baltzer, chief land assessor for the South Side; Mr. Stanley 
C. Chadwick, chief land assessor for the North Side; Mr. Roger E. Ap- 
pleyard, chief land assessor for the West Side; and Mr. H. S. Rosen- 
thai and Mr. A. K. Wyatt of the Industrial Department. 

This book would not have been possible without the work of George 
C. Olcott, who in his lifetime has compiled twenty- two books of 
Chicago land values, which furnish a reliable annual index of Chicago 
land values since 1910. There are few, if any, cities that have such a 
record covering a period of time in which sales data have been difficult 
to secure. Because of Mr. Olcott's work, Chicago has been selected as 
a laboratory for land- value analysis by economists and sociologists. 

There are many real estate men who have contributed their time 
and thought to material that has appeared in this book, and among 
them I should like to express my thanks to Mr. William A. Bond for 



x AUTHOR'S PREFACE 

his appraisals and sales records and to Mr. Clifford R. Bechtel and Mr. 
John Usher Smyth. Mr. William Scott Bond furnished valuable in- 
formation on real estate interest rates. Mr. Lyndon Lesch, of the 
Business Office of the University of Chicago, Mr. Earle Shultz, Mr. 
John P. Hooker, and Mr. Graham Aldis furnished valuable aid by 
giving me records of certain buildings. Mr. Edward G. Skindzier, 
manager of the London Guaranty and Accident Building, furnished 
me data of great value concerning the central business district of Chi- 
cago. Many old residents of the city have aided this work by giving 
me accounts of the character of the improvements in various sections 
of the city in the period following the great fire of 1871. I desire par- 
ticularly to thank Mr. Emil Rudolph, Mr. John E. Cornell, Mr. Frank 
A. Henshaw, and Mr. William H. Spikings. 

The books and monographs of Professor Herbert D. Simpson and 
John E. Burton of Northwestern University have also proved sugges- 
tive and helpful to me in compiling this study. 

In the annals of the past, many whose names are unknown to me 
have furnished invaluable material. The real estate editors of the 
Chicago Tribune, who weekly wrote searching comments upon real 
estate transactions in the Sunday papers since 1870, the editors of the 
Economist, the editors of the Real Estate and Building Journal, have 
written many lines which reappear in these pages. Mr. Frank Chandler 
wrote much on early land-value history, and gave me access to his 
private files before his death. 

Mr. Everett Chamberlin, in his book, Chicago and Its Suburbs 
(1874), and Mr. Mark L. Putney, in his Land Values and Historical 
Notes of Chicago (1890, 1900), furnished great assistance. The work of 
Captain A. T. Andreas on the History of Chicago (1886) proved very 
useful. 

In formulating this study I have been greatly stimulated by the 
ecological studies made by the Departments of Sociology of the Uni- 
versity of Chicago and the University of Michigan, and I desire to 
express my gratitude for helpful suggestions in the works of Professors 
Robert E. Park, Roderick D. McKenzie, Ernest W. Burgess, and Louis 
Wirth. Mr. Earl Johnson's studies of the ecology of the central business 
district of Chicago have been very helpful. 

I desire particularly to thank the librarians of the Chicago His- 
torical Society for the use of their books, maps, newspaper files, and 



AUTHOR'S PREFACE xi 

manuscript material. Miss Alice Daly, of the Chicago Historical So- 
ciety, aided me in securing the Ogden letters and other original docu- 
ments. I am also indebted to the librarians of the University of Chi- 
cago, of the Newberry Library, and of the Chicago Public Library for 
the use of their newspaper files. Mr. Charles Newcomb, of the social- 
science staff of the University of Chicago, planned the technique of the 
maps and charts in this book, and Miss Mae Schiffman executed the 
drawings. To both of them I express my appreciation. I am indebted 
to Miss Janet Murray for the computations of the trends for the charts 
on the Chicago real estate cycle. I express my appreciation also to Mr. 
George S. Wheeler for his careful reading of the manuscript. 

Finally, the city of Chicago itself, with all its kaleidoscopic neigh- 
borhoods and its babble of tongues, is an inspiration to me. This city, 
with all its rough edges and its bluntness, is a city with a unique and 
magnetic urban personality. The land-value changes in such a city 
reveal the methods of physical growth and the moods of a people in an 
environment with which I have been intimately associated. Hence, I 
reluctantly come to the end of a pleasant task, hoping that other citi- 
zens of Chicago will have the delight of digging up the facts for his- 
tories and studies of other phases of Chicago's many-sided life. For 
such historical research will make the present Chicago seem more real 
and vital to us. 

HOMER HOYT 

CHICAGO, ILLINOIS 



FOREWORD 

There is a considerable literature on land economics, but in so far as 
I know Mr. Hoyt's volume presents the results of the first comprehen- 
sive study of land values in a large city over a long period of time. It 
brings together from a great variety of sources the main facts and at- 
tempts to explain them in their interrelations. The result is a distinct 
contribution both to the economic and social history of Chicago and to 
urban land economics. Most interesting, perhaps, and most suggestive 
of the several chapters is the final one on the real estate cycle. 

The history of land values in Chicago should assist in correcting er- 
roneous notions concerning urban land values. The single tax doctrine 
that the changes are all gains, large and unearned, might lead us to be- 
lieve that urban land values rise steadily without any recessions or set- 
backs. This is not true. Banks, insurance companies, and other inves- 
tors will find in the volume much to ponder over. Students of taxation 
will find facts to be taken into consideration when they attempt to de- 
velop a properly rounded system of taxation, and those charged with 
assessing real estate for the purpose of taxation will find detail here and 
there pointing to matters they should not overlook as they go about 
their work. 

Perhaps this volume could not have been written had not Mr. Hoyt 
engaged in the "real estate game" in boom and depression, after devot- 
ing several years to the study and teaching of economics. His experi- 
ence in assessing real estate has also been helpful. The volume of data 
to be collected, studied, and weighed was appalling; the factors to be 
discovered and held in mind many, interrelated, and confusing. No 
doubt errors have crept in and remain undetected by the author and by 
those of us who have read the manuscript. Perhaps there will be differ- 
ence of opinion as to some of the methods employed. Certainly the vol- 
ume cannot be regarded as the final word on every phase of the subject 
discussed. Yet it is a contribution of great value. 

H. A. MILLIS 



xiii 



TABLE OF CONTENTS 

PAGE 

LIST OF ILLUSTRATIONS xxiii 

LIST OF TABLES ...,'.. xxvii 

PART I. HISTORY OF THE RELATION OF THE GROWTH OF 
CHICAGO TO THE RISE IN ITS LAND VALUES, 1830-1933 

CHAPTER 

I. THE CANAL LAND BOOM, 1830-42 3 

A. Introduction: Objectives of the Study 3 

B. Causes of the Early Growth of Chicago 7 

The portage. The fort. The canal. Land trails to Chicago. 
The growth of Chicago, 1830-32. Chicago in 1833. Chicago in 
1834. Chicago in 1835-36. 

C. Land Values in Chicago, 1830-42 23 

The start. The rise begins. Gaining momentum. At full speed. 
The peak. A survey at the summit. The lull. The forces of de- 
pression. The sharp decline. The bottom. A survey at the bot- 
tom. The aftermath. 

II. THE LAND BOOM OF THE RAILROAD ERA, 1843-62 45 

A. The Period from 1843 to 1848 45 

A new start on the canal. Growth of wagon and lake traffic. The 
physical growth of Chicago, 1843-48. A slow rise in land values. 

B. The Period from 1848 to 1857; the New Agencies of Transportation 

and Communication 53 

The canal. The telegraph. The plank roads. The railroads. 
Grain and lumber trade. Infant industries. The new banks. The 
new wholesale trade. The physical growth of Chicago, 1848-57. 
New buildings and public improvements. Chicago's expansion. 
The rise in land values, 1848-57. 

C. The Period from 1857 to 1862; the Panic of 1857 and the Civil War 74 

The panic of 1857. The depression in 1858. The year 1859. The 
year 1860. The collapse of the state banks of issue, 1861-63. The 
horse railways. Land values in 1862. 

III. THE LAND BOOM THAT FOLLOWED A PANIC, A CIVIL WAR, AND A 

GREAT FIRE, 1863-77 81 

A. The Later Civil War Period, 1863-65 81 

B. The Post-war Boom, 1865-71 82 

Growth of Chicago's trade and manufactures, 1865-71. 



xvi TABLE OF CONTENTS 

CHAPTER PAGE 

C. Rise in Chicago Land Values, by Use and Occupation Areas, 1865-71 88 

The main business district. The fashionable residential areas. 
The manufacturing centers, 1863-71. The slums, vice areas, and 
workingmen's quarters, 1863-71. The secondary business streets. 
The parks, 1865-71. The suburbs. The spread of the speculative 
land movement, 1868-71. 

D. The Great Fire of 1871 and the Period before the Panic of 1873 . 101 

The great fire of October 9, 1871. Increase in the value of outly- 
ing lands, 1865-73. A survey of Chicago land values at the peak 
of 1873. 

E. The Panic of 1873 and the Subsequent Depression 117 

F. A Survey at the Bottom in 1877-79 125 

The silver lining. 

IV. THE LAND BOOM OF THE FIRST SKYSCRAPERS AND THE FIRST WORLD'S 

FAIR, 1878-98 .-- . . 128 

A. Recovery in General Business Conditions, 1878-84 128 

The effect on the trade, manufactures, and railroads of Chicago. 
The general effect of improved business conditions upon Chicago 
land values. 

B. The Specific Methods of Recovery of Chicago Land Values, 1878-83 132 

i. Bargains in the central business district, 1879-80. 2. The 
boom on Michigan Boulevard, 1880. 3. The "resurrection" of 
South Chicago, 1879-83. 4. Pullman. 5. The boom in the new 
Board of Trade Quarter. 6. The "flat craze." 7. Growth of the 
outer edges of Chicago. 8. Review of the rise in land values in the 
Chicago area, 1878-83. 

C. The Period from 1884 to 1886 141 

The recession in general business activity in 1883. 

D. Special Factors in the Movement of Chicago Land Values from 1886 

to 1894 142 

i. The growth of Chicago railroads and manufactures, 1886-94: 
(a) The growth of manufacturing. 2. Internal transportation, 
1887-94: (a) The cable loops, (b) Projected elevated and surface 
lines. 3. Steel-frame skyscrapers, 1885-94. 4. Annexation. 5. 
The World's Fair. 6. Department stores and apartments. 

E. The Movement of Land Values in the Chicago Real Estate Market, 
1886-94 159 

The beginning of a new boom, 1886-88. The boom under way, 
1889. Speculation in acre tracts and subdivision activity. The 
culmination of the boom, 1890. The beginning of the lull, 1891. 
The onset of the panic, 1893. 

F. New Transportation Lines, 1894-98 181 



TABLE OF CONTENTS xvii 



G. Summary of the Trend of Chicago Land Values, 1877-98 . . . 184 
The central business section. Fashionable residential areas, 1877- 
95. Outlying business centers. Rise in the value of acre tracts, 
1879-92. The rapid population growth of the outlying territories. 

V. THE LAND BOOM or A NEW ERA THAT FOLLOWED A WORLD WAR, 1898- 
1933 ................... *9 6 

A. Survey of the Causes of the Growth of Chicago, 1830-90 and 1890- 
1933 .................. J 9 6 

B. The Period from 1898 to 1918 ........... 200 

Chicago in 1900. Beginning of the recovery in Chicago real 
estate. New transportation systems. Effect on different sections 
of the city. The central business district: office buildings. The 
Loop retail district. Downtown wholesale area. Summary: 
downtown area. Expanding wholesale and warehouse interests. 
New manufacturing centers. Value of railroad and manufacturing 
property. Fashionable residential property. Apartments. Old 
residential areas. New residential areas. The Chicago land mar- 
ket as a whole, 1900-1908. 

The Period from 1908 to 1918: Central business district. Outly- 
ing business centers. Growth of new neighborhoods. Acre and 
subdivision activity. Fashionable residential areas. Old residen- 
tial areas. Manufacturing and warehouse districts. Apartments. 
Review of the market as a whole, 1908-18. 

C. The Period from 1919 to 1933 ........... 232 

Survey of the general factors affecting urban land in the United 

States, 1919-26. The growth of the trade and manufactures of 

Chicago, 1921-29. The growth in real estate factors, 1919-26. 

Population increase. The building boom. 

Survey of movement of Chicago land values by regions and types 

of property: i. Central business district. 2. The near North 

Side. 3. Tall apartment buildings. 4. Two- and three-story 

apartment building areas. 5. Bungalow areas. 6. Old residen- 

tial areas. 7. Industrial areas. 8. Outlying business centers. 

9. Subdivision and acreage tracts. 

The Chicago real estate market as a whole, 1921-29: Chicago 

land values at the peak. 

The period from 1929 to 1933: Dulness sets in. The stock-mar- 

ket boom and crash. The sharp decline of real estate values in 



A survey at the bottom, March, 1933: The year 1933: a turning- 
point. 



xviii TABLE OF CONTENTS 

PART II. ANALYSIS OF THE RELATION OF THE 

GROWTH OF CHICAGO TO THE RISE OF ITS 

LAND VALUES 

CHAPTER PAGE 

VI. THE RELATION BETWEEN THE GROWTH OF CHICAGO AND THE RISE OF 

ITS LAND VALUES . . . .,.,,./. ,. -\- ,' 2 79 

A. The Demand for Chicago Land . ..... ..-.... . .... 279 

i. The swarm of people: (a) The growth of Chicago compared 
with that of other American cities, (b) Where did the people 
come from? (c) Why did they come? 2. Increase in the number 
of buildings: (a) Increase in the volume of building space, (b) 
Factors determining the volume of building space, (c) Classifica- 
tion of buildings by type of use. (d) The average height of build- 
ings in the Chicago area, (e) The intensity of land utilization in 
Chicago. 

B. The Supply of Chicago Land . . 295 

i. The practical limit to the supply of Chicago urban land: (a) 
Lateral expansion by more rapid transportation. (6) The exten- 
sion into the air. 

C. Causes of Differences in Land Values within Chicago .... 297 

i. The land-value contour map. 2. Physical causes of land-value 
variations: (a) The effect of the lake. (6) The effect of the river. 
(c} The Chicago plain, (d) The three sections of the city. 3. 
The growth of different types of land uses : (a) The fashionable 
residential areas: (i) The decline of Prairie Avenue. (2) The 
lake front grows in importance. (6) Cheap residential areas : (i) 
Expansion of racial and nationality groups, (c) Industrial areas. 

(d) Outlying business centers : (i) Store rents and traffic counts. 

(e) The central business district of Chicago. (/) Summary: Chi- 
cago land values by types of uses. 

D. The Long-Run Trend of Chicago Land Values 344 

i. Corrections of the land-value data for changes in wholesale 
prices, wages, and interest rates: (a) The change in the interest 
rate. (6) Allowance for the cost of street improvements. 2. 
Growth of money at compound interest and rise of land values 
compared. 3. Taxation. 

E. Trend of Population and Land Values by Districts . . . . -353 

i. The centrifugal forces affecting population. 2. The effect of 
population changes on the land-value pattern. 3. The difficulty 
of developing new areas compared with the difficulty of reclaim- 
ing "blighted" areas. 4. The effect of shifting land uses. 5. Specu- 
lative exaggeration of possible demand for certain types of uses. 
6. The future trend of population and land values. 



TABLE OF CONTENTS xix 

CHAPTER PAGE 

VII. THE CHICAGO REAL ESTATE CYCLE . . . . .368 

A. The Tide of Population . . .- . . ,,. : . -. . . . . 368 

B. Definition of the Chicago Real Estate Cycle .... ^=^7 . 369 

C. The Effect of Population Growth on the Chicago Real Estate Cycle 372 

i. The initial impulse a sudden spurt in population growth. 2. 
The supply of houses cannot be immediately increased. 3. Quali- 
fications as to the influence of population on the real estate cycle: 
(a) Limitations of the population and land-value data. 

D. The Sequence of Events in the Chicago Real Estate Cycle . . . 377 

i. Gross rents begin to rise rapidly. 2. Net rents rise even more 
rapidly. 3. As a result of the rise in rents, selling prices of exist- 
ing buildings advance sharply. 4. It pays to erect new buildings. 
5. The volume of new construction rises. 6. The volume of build- 
ing is stimulated by easy credit. 7. "Shoestring" financing swells 
the number of new structures. 8. The new buildings absorb va- 
cant land: the land boom. 9. Optimistic population forecasts dur- 
ing the boom. 10. The vision of new cities in cornfields: the 
method of some subdividers. n. Lavish expenditures for public 
improvements. 12. All the real estate factors at full tide : the peak. 
13. The reverse movement begins : the lull. 14. Foreclosures in- 
crease. 15. The stock-market dtbdde and the onset of the de- 
pression in general business. 1 6. The process of attrition. 17. The 
banks reverse their boom policy on real estate loans. 18. The 
period of stagnation and foreclosures. 19. The wreckage is 
cleared away. 20. Ready for another boom which does not come 
automatically. 

E. Minor Movements of the Individual Real Estate Factors ... 403 

F. Statistical Summary of Sequence of Factors in the Chicago Real 
Estate Cycle 405 

G. The Chicago Real Estate Cycle Compared with the General Business 
Cycle in the United States 407 

i. The magnitude of the oscillations. 2. Duration of the Chicago 
real estate and general business cycles : (a) The long periods of 
depression in Chicago real estate. 3. The relationship of wage 
and interest rates to the land-value cycle. 4. The sequence of the 
real estate and the commodity and stock cycles : (a) The valleys 
coincide but the peaks do not. (b) Commodity, land, and stock 
speculations do not come together but alternate, (c) The ad- 
vantage of a source of liquid capital for real estate operators. 
(d) Speculators tend to stick to the game they know best, (e) 
The public is swayed by the prevailing crowd psychology. (/) 
The delayed effects of a great war. 
H. Real Estate Cycles May Be a Passing Phase 423 



xx TABLE OF CONTENTS 

APPENDIXES 

APPENDIX PAGE 

I. THE CHICAGO LAND MARKET . . . . 427 

A. The Lack of Homogeneity of Chicago Lots 427 

i. Layout of the original subdivision lot and block size: depth- 
rule and corner-influence factors. 2. Differences in the owner's 
title: (a) Guaranty policies of the Chicago Title and Trust Com- 
pany, (b) The Torrens system, (c) Differences in mortgages and 
leasehold interests, (d) Differences in financial necessities of the 
owner, (e) Differences in ownership units. (/) Differences in the 
effectiveness of propaganda. 3. Differences in land values due to 
actions of the community or the state: (a) Differences in tax 
rates and exemptions, (b) Differences in foreclosure and other 
laws relating to land titles, (c) Differences hi building codes and 
fire limits. 

B. The Mechanism of the Chicago Land Market 441 

i. Buyers and sellers: (a) Degree of knowledge of land values. 
(b) Purpose of buying land, (c) Residence or occupation of the 
buyer, (d) Race or nationality. 2. Methods of bringing buyers 
and sellers together. 3. Signing the contract. 4. Terms of sale 
and methods of financing purchases. 5. Sources of price informa- 
tion. 6. Future relations of the parties. 7. Seasonal elements in 
the land market. 

C. The Fundamental Basis of Land Values: Capitalization of Net In- 
come 449 

i. Necessity of a building to produce income. 2. Suitability of 
building to location. 3. The residual income. 4. Forecasting fu- 
ture incomes. 5. Factors in determining future ground rent. 

D. Speculative Errors in Calculating Future Chicago Land Income . 456 

i. Errors in estimating long-run forces of supply and demand: 
(a) Demand-purchasing power, (b) Supply, (c) Capitalization 
rate, (d) Wage rates, (e) Movement of a leader: human and 
catastrophic factors. 2. Errors due to the business cycle. 

II. METHODS EMPLOYED IN DETERMINING CHICAGO LAND VALUES, 1830- 
1932 460 

A. The Main Methods Employed in Determining the Value of Chicago 
Land 460 

i. Sources of land-value data assessments for taxation pur- 
poses. 2. Advertised or listed prices. 3. Appraisals and opinions 
of experts. 4. Sales. 

B. Sources of Sales Data 465 

C. Method of Computing Total Value of Chicago Land from Sample 
Sales 467 

III. STATISTICAL TABLES 470 



TABLE OF CONTENTS xxi 

BIBLIOGRAPHY 

PAGE 

BIBLIOGRAPHY 497 

INDEX 
INDEX 503 



LIST OF ILLUSTRATIONS 

MGURE PAGE 

1 . Location of Chicago with Respect to Waterway Systems .... 8 

2. Land Trails to Chicago 14 

3. Map of Chicago in 1830 16 

4. Subdivision Plat of "Original Town of Chicago," 1830 25 

5. Original Subdivisions, 1830-43 32 

6. Land Values by Square-Mile Sections, 1836 34 

7. Land Values, 1836, Indicated by Sales of Acre Tracts 35 

8. Land Values, 1841-43, Indicated by Sales of Acre Tracts .... 43 

9. Railroads Entering Chicago in 1854 57 

10. Original Subdivisions, 1844-62 68 

11. Land Values per Front Foot, 1856 71 

12. Land Values by Square-Mile Sections, 1857 72 

13. Land Values, 1856-57, Indicated by Sales of Acre Tracts .... 73 

14. Land Values, 1860-63, Indicated by Sales of Acre Tracts .... 79 

15. Chicago Trade and Manufactures, 1840-1931 .... 85 

16. Sewers, Paved Streets, and Bridges, 1873 . 92 

17. The Burned Area, 1871, and Fire Limits, 1872 105 

18. Extent of Settled Area for the Periods 1834, 1844, 1857, and 1873 . . 106 

19. Original Subdivisions, 1863-79 no 

20. Land Values per Front Foot, 1873 112 

21. Land Values by Square-Mile Sections, 1873 114 

22. Land Values, 1870-73, Indicated by Sales of Acre Tracts ... 115 

23. Horse-Car Lines in 1880 126 

24. Street-Car Lines in 1891 145 

25. Extension of City Limits by Annexations 154 

26. Land Values per Front Foot, 1892 186 

27. Land Values for Each Square-Mile Section, 1892 ..... 187 

28. Land Values, 1890-92, Indicated by Sales of Acre Tracts .... 194 

29. Extent of the Settled Area in 1899 204 

30. Factors in the Growth of Chicago, 1890-1932 . . . . . . . 206 

31. Surface and Elevated Lines in 1902 209 

32. Residential Land Values per Front Foot in 1910 220 

33. Land Values for Each Square-Mile Section in 1910 221 

34. Fluctuations in the Net Income of a Chicago Apartment Building, 
1907-31 .... 239 

35. Fluctuations in the Net Income of an Office Building in Chicago, 1905- 

32 .... 240 

36. Distribution of Buildings Seven Stories High or Over, 1933 ... 243 

37. Land Values on Seventy-ninth Street, Stony Island to Crawford, 1910, 
1928, 1931 250 

xxiii 



xxiv LIST OF ILLUSTRATIONS 

FIGURE PAGE 

38. Land Values on Lawrence Avenue, 1910, 1928, 1931 ..... 251 

39. Land Values of the Principal Business Corners outside the Loop, 1910 . 253 

40. Land Values of the Principal Business Corners outside the Loop, 1928 . 254 

41. Original Subdivisions, 1880-1932 ........... 256 

42. Residential Land Values per Front Foot, 1926 ....... 259 

43. Land Values for Each Square-Mile Section, 1928 ....... 260 

44. Extent of the Settled Area in 1926 ........... 262 

45. Increase in Land Values, 1918-28 ........... 263 

46. Extensions to Surface and Elevated Lines, 1903-32 ...... 264 

47. Residential Land Values per Front Foot, 1931 ....... 267 

48. Factors in the Chicago Real Estate Depression, 1926-33 .... 270 

49. The Decline in the Number of Chicago Banks outside the Loop, 1929- 

33 271 

50. Comparison of Ground Area Occupied by the Houses and Yards of Rich 

and Poor Families in Chicago, 1886 .......... 289 

51. Air Space Occupied by Buildings in Chicago, 1933 ...... 293 

52. Extension of Area Occupied by High- Grade Residential or Apartment 
Buildings, 1833-1933 ............... 303 

53. Fluctuations in the Value of Fashionable Residential Land, 1865-1933 305 

54. Land Values in Outlying High-Grade Areas Developed after 1900 . . 306 

55. Residential Land Values, One Block North of Division Street, Lake 
Michigan to Laramie, 1910 and 1928 .......... 308 

56. Residential Land Values, South Side, between Fifty-fifth and Fifty- 
sixth Streets from Lake Michigan to Crawford Avenue, 1910 and 1928 309 

57. Fluctuations in the Value of Cheap Residential Land, Chicago, 1890- 



58. Area Occupied by Predominant Racial or Nationality Groups, 1933 . 315 

59. Land Values in Old Areas Settled before 1873 ........ 318 

60. Extension of Area Occupied by Manufacturing and Industrial Buildings, 
1833-1933 .................. 319 

61. Industrial Land Values, 1931 ............ 321 

62. Land Values on State Street, Chicago Avenue to Fifty-fifth Street, 1873, 
1910, 1928 .................. 323 

63. Land Values on Madison Street, State Street to Central Avenue, 1873, 
1910, 1928 .................. 324 

64. Land Values on Michigan Avenue, Chicago Avenue to Fifty-fifth 
Street, 1873, 1910, 1928 .............. 325 

65. Land Values on North Clark Street, Roosevelt Road to Lawrence 
Avenue, 1873, 1910, 1928 ............. 326 

66. The Relationship between Store Rents and Pedestrian Traffic Counts 327 

67. Land Values on Cottage Grove, Halsted, and Cicero Avenues, 1928 . 328 

68. Land Values on Milwaukee Avenue, 1910 and 1928 ...... 329 

69. Land Values on Sixty-third and Seventy-ninth Streets, Stony Island to 
Crawford Avenues, 1928 .............. 330 



LIST OF ILLUSTRATIONS xxv 

PAGE 

70. Air Space Occupied by Buildings in the Central Business District, 
Chicago, 1836, 1873, 1893, 1923, 1933 332 

71. Maps of Part of the Central Business District of Chicago for the Periods 
1830, 1836, 1854-56, and 1870-73 -7 - - . 338 

72. Maps of Part of the Central Business District of Chicago for the Periods 
1896, 1909-13, 1925-28, and 1931 339 

73. Land Values in the Central Business District of Chicago for the Years 
1830, 1836, 1856, 1873 340 

74. Land Values in the Central Business District of Chicago for the Years 
1894, 1910, 1928, 1931 341 

75. Land Values in the Central Business District of Chicago for the Years 
1910, 1921, 1928, 1931 (Depth of zoo Feet) 342 

76. The Trend of Chicago Land Values, Population, and Manufacturing, 

i835-i933 348 

77. Chicago Land Values in Current Dollars and in Values Corrected for 
Changes in Wholesale Prices, Wages, and Interest Rates .... 349 

78. The Interest Rate on Improved Real Estate in the Central Business Dis- 
trict of Chicago Compared with the Yield on Rail Bonds, 1833-1933 . 349 

79. Miles of New Pavements Constructed Annually in Chicago, 1855-1932 350 

80. The Rate of Increase of Chicago Land Values, 1830-1933, Compared 
with the Rate the Total Land Values of Each Peak Period Would Have 
Increased at 5 Per Cent and 6 Per Cent Compound Interest . . . . 352 

81. The Population Growth of Chicago by Two-Mile Zones, 1830-1930 . 356 

82. Percentage of Increase or Decrease of Population of Chicago by Census 
Tracts, 1920-30 357 

83. Population per Square Mile in Section from Ashland to Halsted from 
Fullerton to Pershing Road, 1850-80 358 

84. Population per Square Mile in Sections from Ashland to Halsted from 
Touhy on North to One Hundred and Twenty-seventh Street on South, 
1890, 1910, 1930 359 

85. Residential Land Values, One Block East of Ashland Avenue from 
Howard Street on North to One Hundred and Twenty-seventh Street 

on South, 1910 and 1928 359 

86. Population Density per Square Mile for a Zone of Land Extending along 
the Lake from the Northern to the Southern Limits of Chicago, 1840- 

1930 360 

87. Land Values per Acre for a Zone of Land Extending along the Lake 
from the Northern to the Southern Limits of Chicago, 1836-1928 . . 361 

88. Chicago Land Values, 1830-1933 (semi-log, scale) 362 

89. Chicago Land Values, 1830-1933 (natural scale) 363 

90. The Chicago Real Estate Cycle. Fluctuations of Per Capita Land 
Values, Per Capita Annual New Construction Costs, and Annual Popu- 
lation Increase above and below the Average Figures for the Cycle 
Period 370 



xxvi LIST OF ILLUSTRATIONS 

FIGURE PAGE 

91. Population and Residential Land Values in Various Sections of Chicago, 
1900-1933 371 

92. The Relation between Increase in Rents per Room and Increase in Oper- 
ating Expenses in Steam-heated Apartments, Chicago, 1933 . . . 380 

93. Volume of New Construction in Chicago, 1854-1932 . . . . . 382 

94. Volume of Subdividing in Chicago, 1830-1932 ; . v . . . . 389 

95. Volume of Real Estate Conveyances in Cook County, Illinois, 1869-1932 396 

96. The Rise in Chicago City Taxes and Special Assessments, 1865-1931 . 397 

97. The Chicago Real Estate Cycle, 1830-1933 (factors on a semi-log, 
scale) ; . .>' . ... 406 

98. Chicago Per Capita Land Values Compared with Wholesale Prices, 
Wages of Unskilled Labor, and Rail Stock Prices in the United States, 
1831-1933 410 

99. The Chicago Land- Value and Building Cycles Compared with General 
Business Activity in the United States, 1830-1933 411 

100. The Chicago Land- Value and Real Estate Transfer Cycles Compared 
with the Cycle of Chicago Manufacturing, 1866-1933 412 

101. The Chicago Land- Value and Subdivision Cycles Compared with the 
Cycle of Chicago Bank Clearings, 1830-1933 413 

102. The Chicago Land- Value Cycle Compared with the Cycles of Wholesale 
Commodity Prices, Canal-Rail Stock Prices, and Industrial Stock 
Prices, 1830-1933 414 

103. Various Methods of Subdividing a Forty- Acre Tract . . . . . 431 



LIST OF TABLES 

TABLE PAGE 

I. Population of Chicago by Wards, 1837-45 51 

II. Value of New Buildings Erected in Chicago by Years, 1864-70 86 

III. Chicago Land Values by Mile Zones from State and Madison 
Streets, 1836-79 116 

IV. The Growth of Chicago, 1877-83, as Indicated by Bank Clear- 
ings, Number Employed in Manufactures, Total Trade, and 
Population 129 

V. Value of Chicago Land by Principal Uses, 1876-83 . . . 140 

VI. Chicago Manufactures, 1884-93, Showing Number of Wage- 
Earners, Amount of Wages Paid, and Value of Product . . 144 

VII. Value of Chicago Land by Principal Uses, 1879-91 ... 175 
VIII. Value of Properties Sold at Judicial Sales in Chicago, 1892-99 181 

IX. Number of Persons over Ten Years of Age in Gainful Occupa- 
tions in Chicago, 1910-30 200 

X. Rents per Month of Selected Old Houses in Chicago, 1892, 

1897, and 1908 216 

XL Annual Amount of Bank Clearings, Manufactures, Wholesale 

and Produce Trade in Chicago, 1908-18 222 

XII. Annual Volume of Real Estate Transfers, New Buildings, Lots 

Subdivided, and Long-Term Leases in Chicago, 1908-18 . . 222 

XIII. Value of New Office Buildings Erected Annually in Chicago 
Compared with Total New Construction, 1908-15 . . . . 224 

XIV. Number and Cost of New Apartment Buildings Compared 
with New Single-Family Residences Constructed in Chicago, 
1910-15 231 

XV. Land Values in Apartment Areas in Chicago, 1910-28 . . 246 
XVI. Land Values in Bungalow Areas in Chicago, 1910-28 . . . 246 

XVII. Value of Residential Land in Old Settled Areas Occupied by 

Medium-Grade Homes 247 

XVIII. Value of Land in Industrial Areas, 1910-29 248 

XIX. Value of Land at Principal Outlying Business Corners of 

Chicago, 1910-29 252 

XX. Average Value of the Land at 425 Street-Car Intersections in 

Chicago, 1910-29 255 

xxvii 



xxviii LIST OF TABLES 

TABLE PAGE 

XXI. Value of Land by Principal Areas and Types of Use in Chicago, 
1910 and 1928, Compared with Population Growth, 1910 and 
1930 / . . 261 

XXII. Decline in Pay-Rolls in Chicago Manufacturing Industries by 

Months from October, 1929, to May, 1933 268 

XXIII. Decline in Employment and in Pay-Rolls in Chicago Manufac- 
turing Industries, 1929-33 . , , . 269 

XXIV. .Average Reduction in Full Value of Land for Assessment Pur- 

poses for 1931 as Compared with 1928 Full Value According to 

the Relative Value of the Land 274 

XXV. Population of Chicago and Other Leading Cities in the Middle 

West, 1840-1930 280 

XXVI. Population of Chicago and Seaboard Cities, 1840-1930 . . 281 

XXVII. Relative Increase in Population of Eleven Leading American 

Cities, 1850-1930 281 

XXVIII. Relative Increase in Population of Thirteen Leading American 

Cities, 1900-1930 282 

XXIX. Population of Some Cities in the Chicago Suburban Area and 

Population of the Chicago Suburban Area, 1900-1930 . . . 282 

XXX. Sources of Increase of Chicago Population, 1830-1930 . . 284 

XXXI. Percentage of Total Increase of Chicago Population Coming 

from Each Source, 1860-1930 284 

XXXII. Number of Buildings in Chicago Compared with Population at 

Intervals from 1825 to 1928 286 

XXXIII. Utilization of Land in Chicago, 1850, 1870, 1890, and 1911 . 290 

XXXIV. Utilization of Land in Chicago in 1923 290 

XXXV. Number of Buildings in Cook County by Principal Types, 1928 291 

XXXVI. Square Feet of Building Space at Various Height Levels in 

Cook County, 1928 292 

XXXVII. Percentage of Total Rented Homes of Each Group in Chicago 

Falling within Given Rental Class, 1932 316 

XXXVIII. Percentage of Cubic Feet at Given Heights to Total Cubic 

Feet in Area (Central Business District) 331 

XXXIX. Percentage of Air Space at Different Heights Occupied by 

Buildings (Central Business District) 331 

XL. Cubic Feet of Space above the Blocks in the Central Business 

District of Chicago v 331 



LIST OF TABLES xxix 

TABLE PAGE 

XLI. Cubic Contents of Buildings in Chicago Central Business Dis- 
trict by Age Groups (Including Basement Area) . . . .335 

XLII. Principal Types of Uses of Central Business District of Chicago 336 

XLIII. Land Values in Central Business District and Entire Area of 

Chicago Compared, 1836-1926 337 

XLIV. Land Values on North-South Streets in the Central Business 

District of Chicago, 1830-1931 345 

XLV. Value of Land hi Chicago by Principal Types of Uses, 1910-33 347 

XLVI. Index Numbers of Chicago Land Values by Principal Types of 

Uses 347 

XL VII. The Amount to Which the Sales Value of Chicago Land at Dif- 
ferent Periods Would Have Grown at 6 Per Cent Compound 
Interest 354 

XL VIII. The Rise in Chicago Land Values Compared with the Growth of 

Land Values at 6 Per Cent Compound Interest 355 

XLIX. Percentage of Increase in the Population of Chicago for Equal 

Time Intervals in Booms and Depressions 373 

L. Rents of Workingmen's Dwellings and Office Buildings in 

Chicago 377 

LI. Rate of Population Increase and Rate of Increase in Rents of 
Office Buildings and Workingmen's Dwellings in Chicago, 1915- 

33 378 

LII. Gross Income, Total Expense (Including Taxes and Deprecia- 
tion) and Net Income of a Chicago Office Building, 1918-32 . 379 

LIII. Seventy-nine Years of Building in Chicago, 1854-1932 . . 384 

LIV. Index Numbers of Population, Office Rents, New Construc- 
tion, Number of Lots Subdivided, and Aggregate Land Values 
in Chicago, 1918-27 384 

LV. Index Numbers of Population, Building, Number of Lots Sub- 
divided, and Land Values in Chicago, 1885-93 385 

LVI. The Amount of Money Loaned on Mortgages and Trust Deeds 

in Cook County, Illinois, 1918-32 386 

LVII. Increase in Annual Cost of Special Assessments in Chicago, 

1862-71, for Years Ending April i 394 

LVIII. Increase in Annual Cost of Special Assessments in Chicago, 

1877-92 394 

LIX. Rise in Annual Amounts of Special Assessments in Chicago, 

1919-27 395 



xxx LIST OF TABLES 

TABLE PAGE 

LX. Decrease in Annual Cost of Special Assessments in Chicago, 

1870-77 . ,.-- ;'.: -:-....-. . . . . . . 395 

LXI. Decrease in Annual Cost of Special Assessments in Chicago, 

1892-97 . .-^ , t . . . ... 395 

LXII. Decrease in Annual Cost of Special Assessments in Chicago, 

1927-32 . ., ; ...... 398 

LXIII. Rents, Value of New Buildings, Transfers, Number of Lots 
Subdivided, Number of Foreclosures, Vacancies in the Central 
Business District, Land Values in Chicago, 1926-33 . . . 399 

LXIV. The Percentage Increase of Factors Affecting Chicago Real 

Estate in Boom Periods . . . . . . . ''. . . . 404 

LXV. The Percentage Decrease of Factors Affecting Chicago Real 

Estate in Depression Periods 405 

LXVI. Sequence of Factors in the Chicago Real Estate Cycle, as Indi- 
cated by Deviations above and below the Normal Trend . . 408 

LXVII. Average Time Intervals in the Chicago Real Estate Cycle 

(Years) . . . ...... . . . 409 

LXVIII. A Comparison of Fluctuations of Chicago Real Estate Factors 
above and below Normal with Fluctuations in General Busi- 
ness Factors 415 

LXIX. Year in Which Major Peaks Occurred in Chicago Land Values 
Compared with Major Peaks in Wholesale Prices, Canal-Rail 
Stock Prices, and Industrial Stock Prices 420 

LXX. Year in Which the Maximum Point of Depression Occurred for 
Chicago Land Values Compared with Maximum Depression 
Points for Wholesale Prices, Canal-Rail Stock Prices, and In- 
dustrial Stock Prices 420 

LXXI. Lot and Block Dimensions of Original Subdivisions in or near 

the Present Loop 428 

LXXII. Lot and Block Dimensions of Outlying Subdivisions of 1836-37 429 

LXXIII. Aggregate Land Value under Different Subdivision Plans and 

Depth Rules . .... . ., . . . ... . . 430 

LXXIV. Estimated Corner Premiums of Lots in the Central Business 

District of Chicago . . ..*,., . . . . . 433 

LXXV. Effect of Doubling the Number of Corners upon Aggregate 

Land Values ... . . 433 

LXXVI. Number of Guaranty Orders Taken by the Chicago Title and 

Trust Company, 1911-33. . . . . . . ., . . . 434 



LIST OF TABLES xxxi 

TABLE PAGE 

LXXVII. Guaranty Orders of the Chicago Title and Trust Company 

Compared with Abstract Orders 435 

LXXVIII. Relation between the Rise and Fall of Gross and Net Rents 454 

LXXIX. Land Value Developed on a 5o-by-i5o-Foot Lot in Chicago by 

Different Types of Residential Uses, 1926 455 

LXXX. Aggregate Value of the 211 Square Miles of Land in the 1933 

Corporate Limits of Chicago, 1833-1933 470 

LXXXI. Number of Instruments Recorded in Cook County, 1872-1932 470 

LXXXII. Total Consideration in Deeds Recorded in Cook County, 1868- 

1902 .... 472 

LXXXIII. Number of Transfers in Cook County, 1901-33 .... 472 
LXXXIV. New Mortgages and Trust Deeds, Cook County, Illinois, 1896- 

1933 473 

LXXXV. Consideration Stated in Deeds for Transfers of Property More 
than Seven Miles from the Courthouse Compared with the 
Total Consideration in All Deeds in Cook County, 1889-1901 473 

LXXXVI. Annual Amount of New Construction in Chicago, 1854-1933 . 474 

LXXXVII. Number of Different Types of Buildings Erected Annually, 

1912-33 476 

LXXXVIII. Index Numbers of Rents of Workingmen's Dwellings in Chi- 
cago, 1914-33 476 

LXXXIX. Number of Lots Subdivided Annually in Cook County and the 

Chicago Metropolitan Area, 1874-1930 477 

XC. Approximate Number of Acres Subdivided Annually in the 

1931 City Limits of Chicago, 1830-1932 479 

XCI. Value of Manufactures, Wholesale Trade, Produce Trade, To- 
tal Trade of Chicago (Gold), 1850-1931 481 

XCII. Percentage of Vacancies in Chicago Office Buildings, 1926-33 482 
XCIII. Population of Chicago (Present City Limits), 1830-1932 . . 483 
XCIV. Distribution of Chicago Population by Mile Zones, 1860-1916 484 

XCV. Number of Passenger Automobiles, Motor Trucks, and Horse- 
drawn Vehicles Registered in Chicago, 1910-33 .... 485 

XCVI. Value of Property Placed under Long-Term Leases and Sold 
at Judicial Sale at the Chicago Real Estate Board Annually, 
1890-1928 486 

XCVII. Assessment of Real Estate in Chicago, 1837-1932 .... 487 



xxxii LIST OF TABLES 



PAGE 



XC VIII. Chicago Tax Levy, 1837-1931 488 

XCIX. Bank Clearings in Chicago by Years from 1865 to 1933 . . 489 

C. Illinois Bell Telephone Company Stations in Chicago at End of 

Each Year, 1882-1933 49 

CI. Number of Passengers Carried by Chicago Rapid Transit Com- 
pany for Years Ending on December 31, 1892-1932 . . . 491 

CII. Annual Cost of Special Assessments, 1862-1932 .... 492 

CIII. Electricity Generated and Sold in Chicago by the Common- 
wealth Edison Company, 1893-1931 493 



PART I 

HISTORY OF THE RELATION OF THE GROWTH OF 

CHICAGO TO THE RISE IN ITS LAND VALUES, 

1830-1933 



CHAPTER I 
THE CANAL LAND BOOM, 183(M2 

A. INTRODUCTION: OBJECTIVES or THE STUDY 
The growth of Chicago from a hamlet of a dozen log huts in 1830 
into an urban agglomeration with a greater population in 211 square 
miles in 1930 than is contained in 825,000 square miles in eight Ameri- 
can states 1 prompts the historian to trace the development of this city 
from its village embryo. The rise of the ground value of that 211 square 
miles from a few thousand to five billion dollars an amount over three 
hundred times as great as the purchase price of the 375,000,000 acres in 
the Louisiana purchase in 1803 an d slightly more than the aggregate 
value of all the farm land in twenty- three American states in 192 5* 
invites the student of urban land values to investigate the humble be- 
ginnings of this world-metropolis. The very rapidity of the growth and 
the present magnitude of Chicago induce a searching analysis of the 
causes for the rise of this city at the juncture of the Chicago River and 
Lake Michigan. 

The uneven character in the rate of growth of the buildings and the 
land values of Chicago during the dynamic era of the American indus- 
trial revolution is, however, of greater significance in the study of eco- 
nomic and social changes than great size or huge land values. Chicago's 
physical growth in buildings has not proceeded at a steady, even pace 
through the century, but by fits and starts. Periods of feverish activity 

1 The population of Chicago in 1930 was 3,376, 436. The combined population of Ari- 
zona, Idaho, Montana, Nevada, New Mexico, North Dakota, Utah, and Wyoming, with 
an area of 825,534 square miles was 3,346,843 in 1930 (U.S. Census, 1930). 

2 The value in 1925 of 243,330,000 acres all the farms in the following states was 
$4,956,206,000: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Con- 
necticut, Kentucky, Tennessee, Alabama, Mississippi, Montana, Idaho, Wyoming, Colo- 
rado, New Mexico, Arizona, Utah, Nevada, New Jersey, Delaware, Maryland, West Vir- 
ginia, Virginia. These are the poorest agricultural states. The value of the farm land in 
these states was only a small part of the value of all farms in the United States, which was 
$55,000,000,000 in 1920 (U.S. Census, 1920; Statistical Abstract of the U.S., 1932, pp. 574- 
75). The value of all land in the United States in 1922 was estimated at $122,000,000,000 
by the Federal Trade Commission (National Wealth and Income [69th Cong., ist sess.; 
Washington, 1926], Senate Doc. 126, p. 34). 

3 



4 ONE HUNDRED YEARS OF LAND VALUES 

in which the whole city seemed to be possessed with a rage 3 to recon- 
struct its business center and to cover the adjacent prairie with houses 
or flats, were followed by periods in which the new growth was so slow 
as to be almost imperceptible. Similarly, Chicago land values did not 
rise with the uniform precision of a compound-interest table. Brief 
intervals of a year when land values in certain quarters advanced 
1,000 per cent were succeeded by years of dulness and painfully slow, 
declining values. These changing moods of the city furnish materials 
for a research in social psychology, and their analysis also illustrates 
the actual nature of city growth and the real behavior of an urban 
land market in a rapidly growing city. 

The character, as well as the rate of growth of Chicago, presents 
startling contrasts. Expanding vertically in taller buildings as well as 
laterally into the prairie, spreading out solidly from the center and 
also in gangling lines and in detached settlements flung out in advance 
of the main body, its physical development was far from uniform. 
" Chicago is at once a metropolis, a collection of villages and a howling 
wilderness," said one observer in the eighties. 4 Within the city limits 
of Chicago in 1933 there are: first, a business center with forty-story 
skyscrapers beside which old six-story (and smaller) buildings humbly 
squat; second, an intermediate belt in which old, fashionable resi- 
dences are found side by side with factories and warehouses, or in 
which acres of frame hovels are packed closely together; third, a fringe 
of tall apartment buildings along the Lake Shore; fourth, outlying areas 
that have independent towns or community centers, some coalescing 
with one another and others separated by tracts of prairie; and, fifth, 
square-mile sections covered with grass and lot stakes as reminders of 
speculative losses in which there is not a solitary inhabitant. In such 
a variegated urban pattern land values vary in 1933 from $1,000 to 
$20,000,000 an acre, and there are cases where the range is from $50 
to $10,000 a front foot within a distance of 200 feet. 

Two processes are the subject matter of this study. The one, the 
physical growth of the city as measured by new buildings, public im- 
provements, and transportation lines, is visible to the eye. The other, 
the growth and shifting of the structure of land values, cannot be seen, 

3 Balzac in his novel Ferragus describes Paris as a monster with a thousand moods, one 
of these moods being a rage for building. 

* Mr. Adler quoted to this effect in the Chicago Tribune, February 19, 1888. 



THE CANAL LAND BOOM 5 

but in our society, dominated by the profit motive, it enters into nearly 
every building project. Except in cases where land is used for sign- 
boards or parking space, an income can be derived from an urban site 
only by erecting a building upon it. Therefore a close relationship 
might be expected to exist between the physical growth of a city and 
changes in its land values. The exact character of the kinship between 
the two sets of forces is not a simple one, and can be determined only 
by an analysis of their behavior in the past. 

The reader may wonder whether a consideration of the unique 
combination of events that produced Chicago will lead to the formula- 
tion of any principles of universal validity. If this fortuitous chain of 
events is not likely to be repeated in the future, the knowledge of the 
sequence of these exceptional causes and effects wih 1 not give one a 
physical law, in which a given set of mechanical forces set in motion can 
be relied upon to produce substantially the same effect. In the history 
of a city there are elements similar to that found in the biography of a 
man. An extraordinary combination of hereditary factors, likely never 
again to be exactly repeated, placed in a historical situation that is also 
a unique complex of men and events, produces a type of human be- 
havior which may not be duplicated. In the thousands of little com- 
munities in a great city, there are local events that have an interest 
chiefly for those who have passed their lives amid the surroundings de- 
scribed and which have the unique attributes of individual men and 
women. Land values reflect the influence of factors that are confined 
to the radius of a block or a precinct in a city ward, and this study 
therefore necessarily deals with topics that are as narrow in scope as 
the history of an obscure family or of one of the thousands of common- 
place apartment blocks. 

A study of an entire city during the whole period of its growth, how- 
ever, discloses a vision that might escape the glance of one whose hori- 
zon was limited by his precinct. The broad sweep of the events of a 
century reveals recurring cycles in the growth of Chicago in which 
general moods or similar historical situations are to a certain extent re- 
peated. Each of the five chapters in the first part of this work deals 
with a complete cycle, which passes through somewhat the same phases. 
It is possible that this long-run study of one city will lead to the dis- 
covery of factors that are characteristic of real estate activity in other 
cities, if allowances are made for inevitable differences in local histories 



6 ONE HUNDRED YEARS OF LAND VALUES 

and local environments. Inasmuch as local forces are at least as im- 
portant as national or international factors in the determination of the 
land values of a community, the nature of the urban land market can 
be learned only by the study of one or more of these local markets for a 
period of time long enough to cover cycles that are sometimes of thirty- 
five years' duration. A general survey of a number of cities for a short 
period of time might conceivably yield less material for the formulation 
of general laws of urban land values than the investigation of the behav- 
ior of land values in one city during the entire period of its history. 

For the growth of a city is a cumulative as well as a cyclical process. 
Each successive building, railroad line, street-car line, or park leaves a 
permanent impress upon the character of the city. A pattern begins to 
form at the very outset that with the lapse of time acquires a certain 
rigidity. The railroad or park system once laid down holds its position 
through great changes. The physical character of the city is altered by 
the imposition of new elements, but the effect of the early direction of 
its growth and of buildings that have long since vanished is never en- 
tirely lost. Similarly, the present magnitude and distribution of land 
values within the city is the summation of a historical process and the 
final result of a long evolution. In the first part of this book is a descrip- 
tion of the manner in which different sections of the city became de- 
voted to certain types of uses, or in which they came to be occupied by 
certain social classes, races, or nationality groups. In other words, it 
is an account of how those dominant characteristics of different Chi- 
cago neighborhoods which vitally affect land values were themselves 
determined. 

In the second part of this work the principal factors in this one hun- 
dred years of growth that can be measured are presented in graphs and 
charts, and local indices of land values, population growth, trade, and 
manufactures are compared with one another and with the curves of 
wholesale prices, stock prices, wages, and interest rates for the entire 
United States. In this latter section, also, the many different unique 
and local factors affecting the values of land for the leading types of 
uses are analyzed from the perspective of a century of dynamic change. 
Thus the attempt is made to consider the qualitative as well as the 
quantitative facts of the Chicago land market, and to seek to discover 
the laws of the behavior of social and economic factors governing 
urban land values. 



THE CANAL LAND BOOM 7 

B. THE CAUSES OF THE EARLY GROWTH OF CHICAGO 

The portage. The glorious destiny of Chicago was perhaps foreseen 
by the French explorer, Joliet, when he visited its site, over one hun- 
dred and sixty years before its first land boom. 5 The pioneers of empire 
hunted for such a spot before they had ever seen it, and during the 
many decades that intervened between its first discovery and its actual 
settlement the advantages of its site entered into the calculations of 
ministers in the capitals of Europe. Its location was carefully marked 
on the maps of North America as a place of strategic importance by 
those who had never caught a glimpse of the dismal swamp that 
seemed to belie all promise of future greatness. 

The reason for the fortunate position of Chicago could be traced 
back a million years to the Ice Age when the glaciers scoured out Lake 
Michigan but did not cut a channel deep enough to turn the waters of 
the Great Lakes permanently into the Mississippi Valley. The St. 
Lawrence River and the chain of Great Lakes formed the first highway 
into the heart of America from the East. The great network of rivers 
that emptied into the Mississippi was the first road to penetrate the 
interior of America from the South. Taken together, the two systems 
formed a huge arc around the English settlements on the Atlantic sea- 
board, and, if properly fortified, would have formed an insuperable 
barrier to westward expansion. At one point these two great waterways 
almost joined, and the land barrier was so slight that it was the route 
most frequently used for the portage between them. This vital spot 
was Chicago. 

The Desplaines River which flows into the Illinois River, a tributary 
of the Mississippi, runs parallel to Lake Michigan for a considerable 
distance not more than ten miles west of it, being separated from it by 
a low continental divide not over six or eight feet high. The first white 
explorers, Joliet and Marquette, searching for just such a place, ob- 
served in 1673 that even this land passage was shortened at Chicago. 
There the main channel and the south branch of the Chicago River and 

5 Joliet, in 1673, made a verbal report on the possibility of a canal that would link the 
Great Lakes with the Mississippi River System, which was reported by Father Dablon as 
follows: "The fourth remark .... is that we can quite easily go to Florida in boats, and 
by a very good navigation. There would be only one canal to make by cutting only half 
a league of prairie to pass from the Lake of Illinois [Lake Michigan] into the St. Louis River 
[the Desplaines and Illinois]" ("Relations" of Father Dablon, Historical Magazine, p. 237, 
cited in A. T. Andreas, History of Chicago [Chicago, 1884], I, 165). 



LOCATION OF CHICAGO 
WITH RESPECT TO WATER-WAY SYSTEMS 




ELEVATIONS ABOVE 
SEA LEVEL 

ON FEET) 
B OVER 900 
Egggj 700-800 




ELEVATIONS ABOVE 




FIG. i 



THE CANAL LAND BOOM 9 

the shallow "Mud Lake" formed during spring freshets a continuous 
waterway from Lake Michigan to the Desplaines and Illinois rivers. 6 
At other seasons the amount of dry ground over which canoes had to be 
carried varied from one to nine miles. 7 Across this portage Indians 
traveled in their canoes before the coming of the white man, and here 
Indians and fur traders met before there was any permanent settle- 
ment. 8 The natural advantages of the Chicago portage suggested to 
the first French explorers two things: first, a fort that would control 
the point for their own nation; and, second, a canal that would make 
the temporary waterway of the spring freshets a permanent year-round 
water route between the Great Lakes and the Gulf of Mexico. 

The fort. In the days when the waterways were the main channels 
of travel from the seacoast into the interior, a portage such as the one 
at Chicago was a gateway through which invading armies as well as fur 
traders were compelled to pass. 9 Its fortification would be the first step 
of any power seeking the military control of the surrounding region. 

6 Pierre Margry, Decouvertes et etablissements des Franqais dans I'ouest et dans le sud de 
VAmerique septentrionale, 1614-1754 memoir es et documents originaux (6 vols.; Paris, '1876- 
86), II, 165-67, quoted in Robert Knight and Lucius H. Zeuch, Location of the Chicago 
Portage of the ijih Century (Chicago Historical Society, 1928), pp. 21-22; also in Good- 
speed and Healy, History of Cook County Illinois (Chicago, 1909), I, 38. Quoting LaSalle 
in his Relations: "This [the Chicago portage] is an isthmus which is 41 degrees, 50 minutes' 
elevation from the pole [Thirty-third Street and Kedzie Avenue] on the west of the Lake of 
the Illinois [Lake Michigan] where one goes by a channel [Chicago River] formed by the 
junction of several streams or gullies of the prairie. It [the Chicago River] is navigable 
about two leagues to the edge of this prairie. Beyond this at a quarter of a league distant 
toward the west there is a little lake [Mud Lake] a league and a half in length which is di- 
vided in two by a beaver dam. From this lake issues a little stream which after twining in 
and out among the rushes for half a league falls into the Chicago river [the Desplaines] and 
from there into the river of the Illinois. When this lake is full either from the great rains in 
summer or from the floods in the spring, it is discharged also into this channel which leads 
to the Lake of the Illinois [Lake Michigan] whose surface is seven feet lower than the prairie 
where is situated this lake. 

"The river of Chicago [Desplaines] does the same in the springtime when its channel is 
full. It discharges by this little lake a part of its water into the Lake of the Illinois, and at 
this time should one make a little canal of a quarter of a league, says Joliet, from the lake 
to the basin which leads to the Illinois river, ships could in the summer enter into the river 
and descend into the sea." 

7 Jesuit Relations and Allied Documents, Vol. LIX, n. 41, quoted in Archer Butler Hul- 
bert, Portage Paths (Cleveland: Arthur H. Clark, 1903), p. 181. 

8 Milo M. Quaife, Chicago and the Old Northwest (Chicago: University of Chicago Press, 
1913), p. 21. 

9 The military advantages of portages are discussed by Hulbert in Historic Highways 
of America, Vol. VII; Portage Paths (Cleveland, 1903), pp. 51-82. 



io ONE HUNDRED YEARS OF LAND VALUES 

The Chicago territory was, however, too far removed from the white 
settlements of the eighteenth century to induce either the French or the 
British to post a garrison there. General Anthony Wayne quickly saw 
the vital importance of Chicago in 1795 when he persuaded the United 
States to acquire from the Indians six square miles at the mouth of the 
Chicago River. 10 Fort Dearborn was accordingly established there in 
1803 to wean away the Indians from the influence of the British outpost 
at Green Bay. The presence of a garrison of about sixty men at the 
fort required the annual visit of a ship to bring provisions, which took 
away on its return trip furs received in trade from the Indians." Ac- 
cordingly, under the protection of the fort, there was built as early as 
1803 a group of five log huts which sheltered the half-breed fur trad- 
ers. 12 The fort itself was located on the south bank of the Chicago 
River at what is now Michigan Avenue. After this first fort was de- 
stroyed on the eve of the Fort Dearborn Massacre in 1812 and a second 
fort was built in 1815, there developed by 1818 a village of ten or twelve 
log huts, characterized by Major Long as "low, filthy and disgusting," 
and occupied by about sixty half-breeds who were mainly engaged in 
the fur trade. 13 In 1830 there were still no more than twelve huts, even 
including three suburban cabins on Madison Street. The fort and trad- 
ing post were far removed from the course of western emigration, which 
prior to 1830 had flowed through the Cumberland Gap or down the 
Ohio Valley and populated in Illinois only the southern portion of the 
state. Consequently up to this date the growth of Chicago was negli- 
gible. 

The canal. The plan for eliminating the Chicago portage by a canal 
was discussed as early as the project of building a fort to control it, and 
in determining the destiny of the future town, the canal was by far the 
more important. The naive belief that a channel eight or nine miles 
long from the end of the south branch of the Chicago River to the 
Desplaines River would provide an adequate ship canal from the lakes 
to the Gulf of Mexico was quickly dispelled by even the casual observa- 
tions of travelers. It was soon discovered that the Desplaines River it- 

10 Quaife, op, tit., p. 43. 

11 Ibid., p. 154, quoting "Wisconsin Historical Collections," XI, 239-40. 

12 Chicago: A Book for Strangers and Tourists (Chicago: Galpin, Hayes, McClure, 1869), 

p. 20. 

J * Quaife, op. cit., p. 28?. 



THE CANAL LAND BOOM n 

self was but a shallow stream with several rapids, which at times could 
not be navigated in small boats. The federal engineers who examined 
the route reported that the construction of a canal for the entire dis- 
tance of one hundred miles from Chicago to LaSalle would be necessary 
to insure a continuous waterway for packet boats. 

These difficulties which gradually unfolded did not stop attempts to 
secure state and federal aid to construct a canal. In 1673 Joliet first 
discussed the canal project. In 1808 Gallatin included it in his program 
of internal improvements. In 1814 President Madison recommended 
it to Congress. 14 In 1816 the United States purchased the route from the 
Indians. 15 Illinois, when admitted as a state in 1818, had its northern 
boundary extended northward from the southern tip of Lake Michigan 
for the express purpose of taking in the strip proposed for the canal. 16 
In 1817 Major Stephen H. Long surveyed and reported favorably on 
it. 17 Southern Illinois interests saw in it the possibility of a new way 
of reaching eastern markets that would free them from dependence on 
New Orleans. In 1818 Governor Bond of Illinois accordingly urged it 
in his first message to the legislature. 18 In 1819 Mr. Calhoun, secretary 
of war, pointing out that the canal would be a vital transportation link 
in time of war, recommended it as necessary for national self-defense. 19 
In 1822 Congress authorized the state of Illinois to survey and take a 
strip of land ninety feet wide for a canal. 20 In 1823 the Illinois legisla- 
ture appointed a Board of Canal Commissioners who examined and 
estimated the cost of five possible routes, the Chicago-Desplaines 
River route being favored. 21 In January of 1825, the legislature incor- 
porated the Illinois and Michigan Canal Company, a private company 
with an authorized capital of $1,000,000, to dig the canal. 22 In Janu- 
ary of 1826, before this enterprise could get started, the legislature, fear- 
ing that federal aid might be jeopardized by its existence, repealed its 
charter. 23 In 1826 the state petitioned Congress for a land grant to 

* Knight and Zeuch, op. cit., pp. 4, 16. v Ibid., II, 70. 

J 5 Quaife, op. cit., p. 342. l8 Goodspeed and Healy, op. cit., I, 89. 

16 Goodspeed and Healy, op. cit., I, 74. I9 Ibid., II, 72. 

20 Public Statutes at Large of the United States (Boston: Little, Brown & Co., 1854), III, 
659-60. 

21 Goodspeed and Healy, op. cit., II, 76. 

32 Laws of the Fourth General Assembly of Illinois (ist sess.; Vandalia, 1825), pp. 160-61. 
*3 Goodspeed and Healy, op. cit., II, 76. 



12 ONE HUNDRED YEARS OF LAND VALUES 

aid the canal, and, notwithstanding the opposition of New Orleans, 
the request was granted in 1827. Alternate sections of land for five 
miles on each side of the route selected were given to the state, but it 
was provided that unless the canal was started in five years and com- 
pleted within twenty years after the passage of the act, the money re- 
ceived from the land sales should revert to the United States. 34 In 
January, 1829, the Illinois legislature, having received this land grant 
from Congress, appointed three canal commissioners to select the 
route, to designate which alternate sections were to be taken for the 
canal, and to sell at $1.25 an acre the land thus chosen. The commis- 
sioners picked the Chicago-Desplaines River route, and prepared a list 
of the sections of land to be granted. This selection was approved by 
the President of the United States on May 21, 1830. Part of one of 
these sections of canal lands, three-eighths of a square mile that strad- 
dled the forks of the Chicago River, was surveyed and laid out in town 
lots. This was the original town of Chicago shown in Figure 4. It 
covered the area from Madison to Kinzie streets, and from State Street 
to Desplaines Street. The first lots in this first Chicago subdivision were 
sold on September 4, 1830. 

The canal itself was not started until July 4, 1836, and, after a 
suspension of work in 1842, was finally completed in 1848. Although 
the canal did not serve as a link in the Lake-to-the-Mississippi trans- 
portation route until eighteen years after the first sale of Chicago lots, 
its importance in directing attention to Chicago and in stimulating the 
speculative land boom cannot be overemphasized. The success of the 
Erie Canal immediately after its completion in 1825 and the rapid rise 
in the land values of the towns along its route led to the extension of 
the same speculative calculations to Chicago when population began to 
flow toward it. The first land-buyers in Chicago saw in their minds' 
eye not the squalid village of log huts on the banks of the Chicago River 
but the large city that was expected to rise with the completion of the 
canal. That the canal colored every resident's hopes even in the earliest 
time is shown by the following account written in 1835: 

There is one improvement to be made, however, in this section of the country, 
which will greatly influence the permanent value of property in Chicago. I allude 
to a canal from the head of Lake Michigan to the head of stream navigation on the 
Illinois River, the route of which has long since been surveyed. The distance to be 

* Public Statutes at Large of the United States, II, 234. 



THE CANAL LAND BOOM 13 

overcome is something like ninety miles, and when you remember that the head 
waters of the Illinois rise within eleven miles of the Chicago River, and that a level 
plain of not more than eight feet elevation is the only intervening obstacle, you can 
conceive how easy it would be to drain Lake Michigan into the Mississippi by this 
route. Boats of 18 tons have actually passed over the intervening prairie at high 
water. Lake Michigan, which is several feet above Lake Erie, is such a never- 
failing body of water that it would keep steamboats afloat on the route in the dri- 
est season. St. Louis would then be brought comparatively near to New York, 
while two-thirds of the Mississippi Valley would be supplied by this route immedi- 
ately from the markets of the latter. The canal is the only remaining link wanting 
to complete the most stupendous chain of inland communications in the world. 3 * 

Under the caption "The Canal Made Chicago" the importance of 
the canal is thus summarized by the Chicago Tribune of May 13, 1900: 

Chicago was then [before 1830] only a military post with an Indian agency 
attached to it. It didn't have enough taxable property to support a bridge tender, 
much less build a canal. When the preliminaries to the building of the canal did 
come about, Chicago immediately leaped into existence as a village. The first 
plat of Chicago was made by the Canal Commissioners ; the first sale of lots of Chi- 
cago was made by the Canal Commissioners. Chicago was made by the canal as 
clearly and as positively as Western towns have been made in recent years and are 
still being made by the advent of railroads. Chicago was a canal town. 

Land trails to Chicago. In addition to the canal project, the land 
trails to Chicago were an important factor in its early growth. The 
paths winding around the lake or following the high ground or the 
river courses that had been made by buffalo, Indians, and fur traders, 
on their way to the banks of the Chicago River, were the first highways 
whose intersection formed the nucleus of a town. Superimposed by the 
surveyors upon these diagonal and fluctuating routes were the straight 
section lines, intersecting each other a mile apart, which developed 
into through highways and carline streets as the city grew, forming a 
precise checkerboard plan. The early trails, confined to definite lines 
by the rows of buildings on each side, still survive in those main roads 
that radiate out from Chicago like the spokes of a wheel. The creation 
of a hub for this wheel, at which all these routes could meet at a com- 
mon center, was, however, prevented by the configuration of the Chi- 
cago River. 

The main channel of the Chicago River and its branches form a Y 
which divides the Chicago region into three main divisions: the north, 

2 s Charles Fenno Hoffman, A Winter in the Far West (London, 1835; reprinted by the 
Fergus Printing Co., Chicago, in 1882), pp. 21-22. 



i 4 ONE HUNDRED YEARS OF LAND VALUES 

south, and west sides. The Chicago River was the point of entry and 
departure for the great stream of passengers and merchandise carried on 
the lake boats, and its banks were the meeting place of land and water 
commerce. While the boats could unload with almost equal facility on 
any bank of the river, the land traffic in those days when bridges and 




FIG. 2 

ferries were crude and few in number generally terminated at the point 
where a particular land route struck the river. The number and the 
volume of traffic of the trails entering each division of the city, there- 
fore, had an important bearing on the early relative growth of each of 
these sections. 

The movement of wagons into the south division of the city was from 
the first by far the greatest. Around the bend of the lake came the 



THE CANAL LAND BOOM 15 

"Chicago Road," the main path by which land emigration from the 
East poured into Chicago. 26 From the South ran the famous Vin- 
cennes trail over which came the caravans of wagons from the Wabash 
country to bring supplies to Chicago. 27 Southwest along the route of 
the canal was an old Indian trail, known as the "Road to the Widow. 
Brown's," and later as "Archer Avenue." 38 The "Chicago Road," fol- 
lowing the present course of Cottage Grove Avenue, north of Thirty- 
ninth Street; the Vincennes trail, which fluctuated north of Fifty-first 
Street between the present line of State Street and Cottage Grove 
Avenue; the "Road to the Widow Brown's," or present Archer Avenue; 
and a trail from the west that crossed the south branch at Eighteenth 
Street 29 all converged at about Eighteenth and State streets and pro- 
ceeded from there to Fort Dearborn on the south bank of the main 
channel at Michigan Avenue. 

The North and West Side trails were less important in the beginning, 
for they led into a territory that contained very few white inhabitants. 
Terminating on the north bank of the river opposite the fort was the 
Green Bay trail running northward along the lake shore to Green Bay 
which had been a British outpost until 1812. It was also used by 
travelers on their way to Sheboygan, Racine, Kenosha, and Milwaukee 
when the lake route was not available. The "Little Fort" trail followed 
the present course of Lincoln Avenue. 30 

On the West Side were trails leading to Galena along the present 
route of Lake Street and Grand Avenue, 31 the portage trail along what 
is now Ogden Avenue, 32 and trails running northwesterly on the ridge 
between the north branch of the Chicago River and the Desplaines 
River that were later known as Milwaukee and Elston avenues. 33 Most 
of these trails converged on the west bank of the Chicago River at the 
forks. 

The growth of Chicago, 1830-32. In 1830 the twelve log cabins that 
constituted Chicago had two nuclei, the fort and the forks of the river, 
connected by a road following the course of South Water Street. Three 

26 Milo M. Quaife, Chicago Highways Old and New (Chicago: D. F. Keller & Co., 1923), 
pp. 37-46. 

2 ? Ibid., pp. 54, 58, 60, 69. 

28 Ibid., p. 79. 31 ftid., pp. 87-88, 91. 

29 Ibid., map opposite p. 236. & Ibid., map opposite p. 236. 

30 Ibid., pp. 105-7. 33 Ibid., p. 107. 




CHICAGO 



1B30. 



N 



I 



10 

CtUHit LH/K/ 



r~: I HI* 

, 2 o *-*lF 

' ' I t-S* fh 




THE CANAL LAND BOOM 17 

taverns, one on each bank of the river, faced one another at the forks. 
One on the South Side, at the corner of Lake and Market streets, was 
the celebrated Sauganash, opened by Mark Beaubien in 1826. A 
second on the West Side at Lake and West Water streets was the 
"Wolfs Point" built by Kinzie in 1828. A third on the North Side at 
North Water and Orleans Street was established by Samuel Miller in. 
1828. A ferry connected the taverns in 1831. With its land trails failing 
to find a common center, the little hamlet faced the river, which was 
the main avenue of entry from outside. 

Chicago did not grow from 1830 to the early part of 1832. There were 
still only twelve houses in the latter year. 34 The location of these build- 
ings is thus described: 

Besides the fort there were two frame houses on the North Side and the old 
Kinzie house. On the South Side were two or three small farm houses, and in the 
West Side the Kinzie store at the forks, and there was Mark Beaubien's tavern 
on Michigan Avenue. 35 

In these years the tide of western emigration had not yet penetrated 
the Chicago Region, being partly restrained by fear of the hostile 
Black Hawk Indians from turning northwestward from the old route 
down the Ohio Valley. 

The way to Chicago was rapidly being made easier and more con- 
venient. The Erie Canal had placed Chicago on a direct line with New, 
York. Steamboats were plying the Great Lakes from Buffalo to Chi-, 
cago, and the Mississippi River boats from New Orleans and St. Louis 
had proceeded up the Illinois River as far as Peoria in i828. 36 Even by 
1831 it was found that goods could be brought from New York to St. 
Louis by way of Chicago one-third cheaper than by New Orleans. Salt, 
shipped from Syracuse to Chicago by boat, sold for less than the cost 
of producing salt at Danville, Illinois, and the farmers of the Wabash 
learned that Chicago was the cheapest market in which to buy eastern 
wares. 

The Black Hawk Indian menace was terminated by an armed force 

34 Andreas, op. cit., I, 119. 

35 Ibid, (letter of George W. Hoffman, April 5, 1879). Mark Beaubien's tavern on Michi- 
gan Avenue in 1832 was the one he operated after he sold the Sauganash. 

36 No regular line of steamboats was operating on the Illinois River before 1835, but the 
name of one steamboat running on the river in 1828 is given, and even before this another 
steamboat of light draft, the "Ottawa," was making trips (Randall Parrish, Historic Illi- 
nois, p. 427). 



i8 ONE HUNDRED YEARS OF LAND VALUES 

under General Scott sent to Chicago in 1832. The soldiers not only rid 
the country of the Indian peril, but on returning home they spread 
the news of the wonderful fertility of the Northwest region, while Gen- 
eral Scott himself brought a favorable report to Washington about the 
possibilities of Chicago. The result was that a flow of settlers started 
toward Chicago in the latter part of 1832. By the end of that year there 
were thirty buildings and two hundred people in the village. There 
were two log bridges, one over the south branch near Randolph Street 
and one over the north branch at Kinzie Street. 

Chicago in 1833. In 1833 there was a row of business houses and 
cabins on South Water Street between State and Wells Street and this 
was the principal street of the town. 37 "There was nothing on Lake 
Street [in 1833]," stated John Bates, a settler of 1832, "except perhaps 
the Catholic Church begun on the northwest corner of Lake and 
State." 38 As Rev. Jeremiah Porter said, "The corner of Clark and Lake 
in 1833 was a lonely spot almost inaccessible on account of surrounding 
sloughs and bogs." 39 Charles Butler in August, 1833, noticed only a 
tavern on the West Side and a single building known as the "Block 
House" on the North Side. 40 

In 1833 the houses began to be constructed of green lumber obtained 
from a local sawmill on the north branch instead of the logs that had 
been previously used. 41 Nevertheless, according to Butler, "the houses, 
with one or two exceptions, were of the cheapest and most primitive 
character for human habitation, suggestive of the haste with which 
they had been put up." 42 Charles Latrobe thus describes the building 
activity of that year: 

The interior of the village was one chaos of mud, rubbish and confusion. Frame 
and clapboard houses were springing up daily under the active axes and hammers of 
the speculators and piles of lumber announced the preparation of other edifices of 
equally light character.-" 

svGranville T. Sproat, letter to the Chicago Tribune, December 12, 1886; letter of 
Charles Butler, December, 1881, in Andreas, op. cit., I, 129. 
3 8 Andreas, op. cit., I, 131. 39 Ibid., p. 300. 

*>Ibid., p. 129 (letter of Charles Butler, December 17, 1881). 

41 Charles Cleaver, Reminiscences of Chicago during the Forties and Fifties (Chicago : 
Fergus Printing Co., 1913), p. 54. 

42 Andreas, op. cit., I, 129 (letter of Charles Butler, December 17, 1881). 
Ibid., p. 124. 



THE CANAL LAND BOOM 19 

From 150 to 200 new buildings were erected in Chicago in 1833. The 
number of vessels arriving had increased from 7 in 1831 and 45 in 1832 
to 120 in 1833. A newspaper, the Chicago American, made its first ap- 
pearance. A town government was organized by the 350 inhabitants. 
The federal government appropriated $25,000 for dredging the harbor. 
The first manufactures a tannery (1831), Dole's meat-packing plant 
(1832), a soap factory (1833), an d a brick yard (1833) had started 
along the banks of the river, chiefly on the North Side. 

Chicago in 1834. The growth of Chicago was particularly rapid 
during 1834, as its population increased from the 350 of the year before 
to 2,000. The principal growth of that year was along Lake Street, 
but the corner of Lake and LaSalle streets was still so far from the cen- 
ter of business that the construction of a four-story brick building at 
that point was referred to as "Hubbard's Folly." The construction of a 
drawbridge over the main channel at Dearborn Street in 1834 had the 
effect of concentrating business near South Water and Dearborn 
Street. A freshet in the spring of 1834 completed the work of dredging 
the harbor. Steamboats and larger vessels which had hitherto been 
compelled to anchor in the lake opposite the bar at the river's mouth 
could now enter through the main channel into the heart of the business 
district. The limited extent of the town in 1834 is indicated by the fol- 
lowing account: 

Besides the log cabin on the West side kept by Mr. Stiles, there was a black- 
smith shop. That was all. On the North side were John Kinzie's house and a few 
others. On the South side there was one house south of Lake Street. On Lake and 
South Water streets was the main village. Lake Street boasted one brick block 
which belonged to Hubbard.44 

Chicago in 1835-36. Chicago continued to grow rapidly during 1835 
and 1836. The population increased from the 2,000 of 1834 to 3,264 in 
1835 and 3,820 in 1836. By 1837 there were 450 buildings as contrasted 
with 1 80 in 1833 and 12 at the beginning of 1832. 

The main part of the settled area of Chicago in 1836 was on the 
South Side near the river. As one observer said: 

When the bank was in operation [December, 1835-36], Chicago was confined 
principally to the vicinity of the river. The dwellings even did not stretch far 
away from the center. In the spring of 1835 a three-story brick building, probably 
117 Lake Street, near LaSalle Street, was erected and finished in the fall. It was 

44 Letter of Enoch Chase, August 2, 1883, in ibid., pp. 138-39. 



20 ONE HUNDRED YEARS OF LAND VALUES 

the general impression that the stand was too far from the center of business and 
would prove a bad speculation. 

The solidly built-up section did not extend south of Randolph 
Street on the South Side in 1836, according to Mr. Charles C. P. 
Holden. "It was principally prairie with some timber southerly from 
Randolph Street, though there were some groups of buildings scattered 
here and there with small patches of ground inclosed with rail fences." 46 
Dearborn Street, near the drawbridge, between Lake and South Water 
streets, was "the lively street" and the center of activity, for there was 
located Garrett's auction-room where $1,800,000 worth of real estate 
was sold in the latter part of 1835 an d i836. 47 

The North Side began to grow rapidly in 1835. When Charles But- 
ler inspected Kinzie's and Wolcott's additions in May of 1835, he gave 
the following description of the land that lay just north of the main chan- 
nel of the river. "The property lay there on the north side of the river 
covered with a coarse growth of oak and underbrush, wet and marshy 
and muddy from the recent rains." 48 By 1836, however, there was a sub- 
stantial settlement on the North Side along the river and east of Clark 
Street, for Mr. Holden said that "the North Side at that time [1836] 
was very pretentious and there was lots of business done over there, 
though but a short distance from where we landed was the wild woods 
of that day." 49 The principal shipping and forwarding business at this 
time was done on the north side of the river. 

The growth of the West Side lagged far behind the other sections in 
this period. When Charles Cleaver hi 1838 put up a building at the 
corner of Washington and Jefferson streets, which is only three blocks 
west of the river, he stated that "standing there alone for years, it 
served as a beacon for many a belated traveller over the ten miles of 
prairie between the village and the Desplaines River." "At that time," 
he continued, "it seemed a long way out of town. There was but one 
shanty between it and the Lake Street bridge, and it really seemed 
quite a walk over the prairie to reach it." Thereafter, from 1838 to 
1843 a house was gradually built here and there between Cleaver's 
house and the river, but the filling-in process was very slow. 50 



Chicago Tribune, July 3, 1887. 

47 Letter of J. D. Bonnell, March 15, 1876, cited in Andreas, op. cit., I, 137. 

48 Ibid., p. 131. 4 ' Chicago Tribune, July 3, 1887. 
50 Cleaver, op. cit., pp. 55-56. 



THE CANAL LAND BOOM 21 

By the close of 1836 Chicago contained some very pretentious struc- 
tures for that time. The Saloon (Salon) Building, a four-story brick 
structure at the corner of Clark and Lake streets, contained the finest 
hall west of Buffalo. The four-story Lake House, built on the corner 
of Rush and Michigan Street on the North Side at a cost of $100,000 
was one of the best hotels in the West. The Ogden House at Rush, 
Ontario, Cass, and Erie streets, and the Clarke House at Sixteenth and 
Prairie, standing a mile and a half away from any other house, were the 
two mansions of that day, whose magnificence surpassed all others. 
Each of these homes cost $10,000 a large expenditure for that time. 

A newspaper correspondent revisiting Chicago in January of 1837 
after an absence of two years found that great changes had taken place. 

I can scarcely recognize it as the same spot. Where then I walked over the un- 
broken prairie, the spacious avenue is now opened, crowded with carts and wagons, 
and occasionally a showy family rolling and dashing in the hurry of trade, or the 
pomp of the native "sucker" stumbling as I do, over bales and boxes on the side- 
walks, or gaping at the big signs and four-story brick houses.* 1 

This scene of activity had a very limited scope, however, for of the 
4,179 people in Chicago in 1837, there were only 433 on the entire West 
Side and only 320 on the North Side west of Clark Street. The limits 
of the settled area in 1837 were thus defined: 

The inhabited portion of Chicago [in 1837] consisted chiefly of Kinzie Street on 
the North Side with a few scattered residences on Clark, Dearborn, Wolcott and 
Rush; on Lake and South Water streets on the South Side; and on those portions of 
Clark, Dearborn and LaSalle streets between South Water and Washington streets 
there were small frame houses surrounded by gardens. State and Madison Street 
was then way out in the country. The West Side was most sparsely settled and 
plover and snipe abounded from Clinton Street to Union Park. 52 

The concentration of a population of 4,179 into a settled area of only 
25 blocks, or 100 acres, when there were boundless tracts of prairie in 
every direction seems strange. The explanation is to be found in the 
abnormal age and sex distribution of the population and in the in- 
tolerably bad condition of the roads. Over 1,900, or 45 per cent of the 
total population, consisted of adult males, and there was a large pro- 
portion of single men who lived at hotels or boarding-houses or at the 
stores of their employers. 53 Transient sailors lived on ships; farmers and 

51 Andreas, op. cit., I, 138. 

53 Moses and Kirkland, History of Chicago, I, 105. 

53 Wentworth, Reminiscences of Early Chicago (Chicago: Lake Side Press, 1912). 



22 ONE HUNDRED YEARS OF LAND VALUES 

emigrants camped in their prairie schooners. Thus, there was an aver- 
age of over 10 persons to each of the 398 dwellings in the city. The 
overcrowded condition in Chicago, even in 1834, is thus told: 54 

By the middleof May [1834] there was no room for the constant crowd of incomers, 
except as buildings were hastily put up for their accommodation, or as sojourners 
leaving town made room for them. The hotels and boarding houses were always 
full, and full meant three in a bed sometimes, with the floor covered besides. Many 
of the emigrants coming in their own wagons had only them or a rude camp, hastily 
built for home and shelter. All about the outskirts of the settlement was a cordon 
of prairie schooners, with tethered horses between, interspersed with camp fires, 
at which the busy housewives were ever preparing meals for the voracious pioneers. 

The following description of the early streets of Chicago also explains 
why people did not venture far out into the prairie but huddled close 
to the river and the stores: "From the rains the streets of the village 
soon became deluged with mud. It lay in many places half-leg deep, 
up to the hubs of carts and wagons in the middle of the street. The 
smaller children I used to bring to school and take home on my back." 55 

Chicago in 1837 was also abnormally developed with respect to the 
number of its stores. The 29 dry-goods stores, 5 hardware stores, 45 
grocery and provision stores, 10 taverns, and 19 lawyers' offices were 
far in excess of the requirements of a population of 4,000. Chicago was 
the trading center of the territory within a radius of 200 miles, how- 
ever, and as many as 500 farmers' wagons could be counted at one time 
in their camp in the town. Chicago was also a refitting-point for emi- 
grants, the county seat, and hence the legal center of an area that em- 
braced the present Cook, Lake, McHenry, Will, and DuPage counties, 
an area of approximately 3,200 square miles. It was the seat of the 
government land office for the surrounding region, the site of the 
branch bank of the state, and a distributing-point for the Indian trade. 
The total volume of business amounted to $1,000,000 in 1836, with one 
firm on Lake Street reporting sales of $41,000 even in the depression in 
1837. At this time the surrounding country was not even self-sufficing, 
and all the goods sold were imported from the East, the ships going 
back with sand as ballast. 

The North Side was growing faster than the other sections of the 
city from 1837 to 1840, its population increasing from 1,238 to 1,759, 
a gain of 41 per cent, while the population of the South Side increased 

54 Andreas, op. cit. t I, 134. 

55 Chicago Tribune, December 12, 1886 (Granville T. Sproat, the first school-teacher). 



THE CANAL LAND BOOM 23 

only from 2,330 to 2,664, a gain of 14 per cent, and the population of the 
West Side remained stationary. All the warehouses for receiving farm- 
ers' produce were located on the north bank of the river, and as the 
farmers came from the south, it was necessary for them to cross the 
Dearborn Street bridge. In 1839 this bridge became unsafe and was 
demolished, a ferry being substituted for it. About this time property 
owners on South Water Street began to build warehouses there with 
the result that the farmers unloaded their produce on the South Side 
and no longer crossed the river. 56 The North Side interests attempted 
to regain their old trade by securing the building of a bridge over the 
main channel at Clark Street in 1840. This move did not bring the 
trade back to the North Side, but it did aid in the establishment of a 
new business center at Clark and Lake streets. As William B. Ogden 
wrote in 1841, "Business is all concentrating on Lake and Clark streets, 
and every concentration of it makes serious inroads on the little that 
is left on our [i.e., North Side] side." 57 The North Side never recovered 
its business prestige, but it held the position, during the forties, of the 
leading fashionable residential section of Chicago. 

Chicago grew slowly during the years of depression, 1837-42. By 
1842 it extended three or four blocks in every direction from the river. 
Mr. Waughop thus characterizes the young city in that year: "In 1842 
Chicago had the appearance of an overgrown country town. The limits 
[i.e., of the settled area] on the north Indiana [Grand], Madison on the 
South and Jefferson on the West." 58 

Such was the physical growth of Chicago during its first land cycle, 
which will now be described. 

C. LAND VALUES IN CHICAGO, 1830-42 

The start. Although the possibility of a canal from the Chicago to 
the Desplaines River had been discussed for many years prior to 1830, 
and the strategic importance of the site of Chicago had long been evi- 
dent, there was no attempt to buy government land in the Chicago 
region before 1830. The long nation-wide depression that began in 
1819, together with the local financial difficulties that had followed the 

s6 Henry Brown, The Present and Future Prospects of Chicago (Chicago: Fergus Print- 
ing Co., 1876), p. 22. 

57 Letter of William B. Ogden, March 27, 1841 (MS in Chicago Historical Society). 

58 J. W. Waughop in Chicago Tribune, September 28, 1884. 



24 ONE HUNDRED YEARS OF LAND VALUES 

collapse of the first attempt at state banking, as well as the lack of 
population in this region, seem to have prevented any speculative 
movement from getting started. In 1833 the Pottawatomie Indians 
sold to the United States 20,000,000 acres near Chicago at the rate of 
approximately $0.06 an acre. 59 Up to 1830 no part of the Chicago region 
was considered more valuable than any other government land that was 
offered for sale throughout the West for a minimum of $1.25 an acre. 
The value of the 211 square miles in the present city limits of Chicago 
was, therefore, no more than $800 a square mile, or $168,800, at the 
beginning of 1830. There were few buyers for it at this price and hence 
even this valuation for 1830 might be considered excessive. Kinzie did 
not consider it worth while to exercise his pre-emption rights on the 58 
acres lying at the forks of the river. 60 The first sale of lots by the Canal 
Commissioners in September, 1830, showed only a slight advance over 
the minimum acre value. The highest price paid for an 8o-by-i8o-foot 
lot on the river was only $100. 

The corners of South Water Street and Lake and Dearborn streets 
sold for $0.50 a front foot. Back lots sold for as low as $10 for half- 
acre tracts. The average value of the Original Town could scarcely 
have exceeded $25 an acre at the time, while land directly adjoining 
the original townsite on the north side of the river still sold for $1.25 
an acre. 61 

The advance in land values from 1830 to 1832 was very slight, for the 
corner of Lake and Wells (80 feet by 150 feet) sold for only $39 in 1832 
and the corner of the same size at South Water and Dearborn for only 
$78. 62 A corner of Randolph and Dearborn streets sold for only $60 
the same year. 63 A visitor to Chicago who saw a sheet of water cover- 
ing most of the site of the future metropolis said, "I would not give 
six pence an acre for the whole of it." 64 

The rise begins. The marked increase in population and building 
activities during 1833 was reflected in the beginning of a sharp increase 
in the value of lots in the Original Town in the improved business sec- 
tion on the south side of the river. A lot on South Water Street, just 

59 Andreas, op. cit., I, 125-28. 

60 Quaife, Chicago Highways Old and New, p. 19. 

61 Shortall and Hoard's Abstracts, Vol. 80, p. 526. 

62 Ibid., Vol. 85, p. 510. <& Ibid., Vol. 75, p. 156. 

6 4 James Parton, article on "Chicago" in Atlantic Monthly, March, 1867, p. 326. 




FIG. 4 



26 ONE HUNDRED YEARS OF LAND VALUES 

west of Wells, that sold for $42 in September, 1830, and for only $66 as 
late as October, 1833, brought $800 on November 30, 1833. The de- 
mand for lots for actual use started a speculative movement in which 
prices advanced from day to day. Real estate activity spread from 
the center to the periphery of the town, and land operations, at first 
confined to a few, engaged the attention of every resident. The genesis 
of this real estate boom is thus described by Andreas: 

At first the purchases were what might be termed legitimate, a lot for cash on 
which the purchaser would erect a dwelling or a store. The legitimate demand soon 
absorbed the floating supply and prices began to rise under the competition of 
anxious buyers. Lots purchased one day for $50.00 were sold the next for $60.00 
and resold the next month for $100.00. It did not take long under such circum- 
stances to develop a strong speculative fever, which infected every resident of the 
town and was caught by every newcomer. At the close of the year 1834 the disease 
had become fairly seated. Whatever might be the business of a Chicagoan or how- 
ever profitable, it was not considered a full success except it showed an outside 
profit on lots bought and sold. 6 * 

As the demand for lots at the center of the town grew more intense, 
a new supply of lots beyond the limits of the settled area was put on 
the market and the scope of activity was broadened. The School Board 
was prompted to subdivide the School Section the square mile from 
State to Halsted streets and from Madison to Roosevelt Road. The 
142 blocks of an average size of 3.5-4 acres were sold on October 4, 

1833, at the average rate of $60 an acre, or $38,865 for the entire sec- 
tion except the two corners on Madison Street at State and Halsted 
streets that were reserved for school sites. 66 The advance in value from 
$1.25 to $60 an acre from 1830 to 1833 was considered quite satisfactory 
by the School Board at the time of the sale, but they soon regretted 
their haste in selling this land. Ever afterward they were to be blamed 
for disposing, for this trifling sum, of what later became the most valu- 
able square mile ever given for the benefit of the education of future 
generations. 

Gaming momentum. The rise in land values gained momentum in 

1834. The entire United States was beginning to engage in feverish 
land speculation, and people were coming to Chicago with visions of 
the future city at the mouth of the Illinois and Michigan canal. In 
June, 1834, the corner of South Water and Clark Street, 80 by 180 feet, 

^Op. dt., I, 115. 
66 Ibid., p. 133. 



THE CANAL LAND BOOM 27 

sold for $3,500, thirty-five times as much as had been paid for it two 
years before. A year later it sold for $i5,ooo. 67 

A number of factors contributed to swell the rising tide of Chicago 
land values in 1835. First, the Illinois legislature on February 14, 1835, 
authorized the governor to pledge the canal lands and tolls for a loan 
of $500,000 to start work on digging the canal. 68 Second, the same body 
chartered a new State Bank of Illinois with a capital of $1,500,000, 
empowering it to borrow $1,000,000 and reloan it upon Illinois real 
estate at not more than half its value. It was also permitted to issue 
notes up to two and a half times its capital to be redeemed in specie 
under penalty of enforced liquidation. 69 A branch of this bank was 
established in Chicago in December, 1835, and one of the most potent 
devices for raising land values, liberal credit to land-buyers, was there- 
by created. Third, a government land office was opened in Chicago on 
May 5, 1835. This attracted to the city a horde of speculators and real 
estate agents and created a market in which buyers and sellers were 
brought into close compass. 

Repercussions of speculative forces that were sweeping the entire 
nation interacted upon these local factors and produced a higher pitch 
of excitement than these state policies alone could have generated. The 
bills of the state banks of Michigan, Indiana, and Wisconsin were even 
more numerous in Chicago than the bills of the State Bank of Illinois. 
New batches of Michigan bills could be secured almost at will by a law 
which authorized such notes to be issued in exchange for private obliga- 
tions secured by mortgages on the lands in that state. The fame of 
Chicago real estate was so great in New York City that Chicago lots 
were sold there at public auction. The high prices paid for these lots 
in the eastern city astonished the local speculators and stimulated fresh 
advances when the news finally reached the West. The report of a sale 
by Mr. Hubbard of a half-interest in a tract of eighty acres at the 
corner of Halsted and Chicago Avenue for $80,000 in New York in 
1835, which represented a profit of $77,500 made in a few months, was 
at first not believed to be true. When confirmed by Mr. Hubbard him- 
self, local landowners revised upward their opinion as to the value of 

67 Goodspeed and Healy, op. cit., I, 107; Shortall and Hoard's Abstracts, Vol. 40, p. 892. 

68 Laws of Illinois (pth General Assembly, ist sess.; Vandalia, 1835), p. 222. 

69 Laws of Illinois (1834-35), p. 7; G. W. Dowrie, Development of Banking in Illinois, 

1863 (University of Illinois, 1913), pp. 61-63. 



28 ONE HUNDRED YEARS OF LAND VALUES 

their holdings. Buyers brought money from New York, from the South, 
and even, in the case of George Smith, from Scotland to invest in 
Chicago lands. If outsiders were thus so anxious to buy, it is a matter 
of little surprise that the local residents, who saw the rapid rise in land 
values which was daily taking place before their eyes, invested all the 
money they could raise in land, which was making people wealthier in 
a year than a lifetime of hard labor. The effect upon local sentiment 
of this outside participation in the Chicago land market is thus de- 
scribed by Andreas: 

The speculative mania was not confined to Chicago or the West. A superabun- 
dance of paper money issued under divers state laws had flooded the whole country, 
in volume far in excess of the requirements of legitimate trade, and was seeking 
outside investment in all quarters. In the money centers of the East, New York, 
Boston and Philadelphia, a furore of speculation in all commodities and in real 
estate was at its height before the Western mania was fairly started. The rumors 
of fortunes made in a day in Chicago in the purchase of Western lands soon reached 
New York, where among the capitalists the excitement became but little less than 
at home. There a new speculative demand grew up which proved an outlet for the 
avalanche of new towns that were being thrown on the market. But for this the 
craze might have spent itself sooner; as it was, Eastern capitalists, after once em- 
barked on the trade, became the most reckless and wildest speculators and held the 
excitement at fever heat until the collapse which began in the East forced them 
to take an observation, which resulted in a sudden and complete stoppage of mone- 
tary supplies from that source. 70 

The supply of subdivided lots in Chicago was constantly being in- 
creased to meet the growing demand. Kinzie's Addition, north of the 
river, east of State Street, had been platted in 1833, Wolcott's and 
Bushnell's additions, on the North Side from State to Sedgewick 
streets and from Kinzie to Division Street, were added in 1835. Most of 
the blocks in the School Section had also been split up into lots by 



At full speed. Under the influence of these forces, the rise of land 
values in Chicago in 1835 was extremely rapid. The Tremont House 
lot at the corner of Lake and Dearborn (80 by 180 feet) that could have 
been bought for a cord of wood, a pair of boots, and a barrel of whiskey 
in 1831, 1832, and 1833, respectively, was now valued at a sum of 
money that would fill a warehouse with such commodities. 72 Dole's cor- 

70 Op. Cit., I, I 35 . 

71 Plats of the Chicago Title and Trust Co. 

72 J. D. Bonnell in Andreas, op. cit., I, 137. 



THE CANAL LAND BOOM 29 

ner, at Dearborn and South Water streets (80 by 180 feet), was sold for 
$9,000 in March of 1835 and for $25,000 in December. One hundred 
thousand dollars was offered and refused for Hogan's block at 272 
Lake Street. 73 

Lots and blocks in the School Section rose precipitately in value. 
Block 134 increased from $400 to $2,200 between March 20 and June 6, 
i835. 74 Block 137 advanced from $260 in 1933 to $3,500 on December 
7, i835. 7S Block 65 rose from $602 in 1834 to $2,000 in 1835.^ Other 
blocks advanced in like proportion. The corner of Clark and South 
Water streets, 80 by 150 feet, that sold for $2,000 on March 15, 1834, 
and $3,500 on June i, 1834, brought $15,000 on June 10, i835. 77 The 
effect of the rise was felt as far as six miles from the center of the town. 
Land at Madison and Kedzie had risen to $10 an acre, 78 at Fuller ton 
and Cicero to $12 an acre, 79 and at Sixty-third and State to $10 an 
acre 80 all having made this gain from the base price of $1.25 an acre 
by the fall of 1835. Land in the southern and northwestern part of the 
present city, however, could still be bought for $1.25 an acre in 1835. 

The peak. This rise in land values continued during the spring and 
summer of 1836. The agents of the governor had been unable to obtain 
a loan of $500,000 at 5 per cent interest, secured only by a pledge of the* 
canal lands and tolls as authorized by the law of 1835, so in January, 
1836, a new law was passed authorizing the governor to pledge the 
general credit of the state for a loan of $500,000 at 6 per cent interest. 
It also provided for the sale of lots in the Original Town of Chicago and 
in Fractional Section 15 on June 20, 1836, at prices not less than valua- 
tions placed on them beforehand by the Canal Commissioners. 81 The 
same law also allowed that method of partial payment, known as 
"canal terms," by which the purchasers of land were required to pay 
only one-fourth down and the balance in three equal instalments in one, 
two, and three years, with interest at 6 per cent per annum on the un- 

Goodspeed and Healy, op. cit., I, 116. 

74 Shortall and Hoard's Abstracts, Vol. 34, pp. 820-21. 

75 Ibid., pp. 320-32. 

76 Ibid., Vol. 39, pp. 114-15. 77 Ibid., Vol. 40, pp. 892-94. 
78 Chicago Title and Trust Abstracts, Vol. 940, p. 569. 

v>Ibid., Vol. 3302, p. 512. 8o Ibid., Vol. 1078, p. 215. 

81 Laws of Illinois (gih General Assembly, 2d sess.; Vandalia, 1836), pp. 145-50, sees, 
i, 2, 33. 



30 ONE HUNDRED YEARS OF LAND VALUES 

paid balance. 83 Under the conditions of this law of 1836, a loan of 
$500,000 was successfully negotiated in New York. 83 The date fixed 
by legislative fiat for the sale of town lots in Chicago almost coincided 
with the peak of the real estate market. Consequently, with sales on 
that day of $1,619,848, of which $400,000 was received in cash, 84 the 
Canal Commissioners had sufficient funds to start the canal at Chicago 
on July 4, 1836. At last the preliminary work had begun on the project 
upon which such great speculative hopes had been founded. 

Speculation in Chicago reached fever heat by June and July of 1835. 
That is was absorbing the attention of nearly everyone in the town is 
indicated by the following account by Harriet Martineau: 

I never saw a busier place than Chicago was at the time of our arrival [1836]. 
The streets were crowded with land speculators, hurrying from one sale to another. 
A negro dressed up in scarlet bearing a scarlet flag and riding a white horse with 
housings of scarlet announced the time of sale. At every street corner where he 
stopped the crowd gathered around him; and it seemed as if some prevalent mania 
infected the whole people. As the gentlemen of our party walked the streets, store- 
keepers hailed them from their doors with offers of farms and all manner of land 
lots, advising them to speculate before the price of land rose higher.** 

Not only Chicago town lots, but the lots of five hundred Illinois 
towns, many of which never existed except on a plat and are now corn 
fields, were offered for sale in Chicago. 86 Chicago was "the hatching 
place of the brood of western towns"; it was the center of a speculative 
whirlpool whose character and scope is thus vividly described by 
Joseph N. Balestier: 

But the few miles that composed Chicago formed but a small item among the 
subjects of speculation. So utterly reckless had the community grown that they 
chased every bubble that floated in the speculative atmosphere ; madness increased 
in proportion to the foulness of its aliment; the more absurd the project, the more 
remote the object, the more madly were they pursued. The prairies of Illinois, the 
forests of Wisconsin and the sand hills of Michigan presented a chain almost un- 
broken of supposititious villages and cities. The whole land seemed staked out 
and peopled on paper. If a man were reputed to be fortunate, his touch, like that 
of Midas, was supposed to turn everything into gold, and the crowd entered blindly 

** Ibid., p. 150, sec. 35. 

83 James William Putnam, The Illinois and Michigan Canal (Chicago, 1918), p. 41. 

84 Moses and Kirkland, op. cit., I, 96. 

85 Reminiscences of Early Chicago (1912), pp. 27-28. 

86 William Vipond Pooley, "The Settlement of Illinois from 1830 to 1850," Bulletin of 
the University of Wisconsin, No. 220 (1908), pp. 278-79. 



THE CANAL LAND BOOM 31 

into anything he might originate. These worthies would besiege the land offices 
and purchase town sites at a dollar and a quarter per acre, which in a few days ap- 
peared on paper, laid out in the most approved rectangular fashion, emblazoned 
in glaring colors, and exhibiting the public spirit of the proprietor in the multitude 
of their public squares, church lots and school lot reservations. Often was a ficti- 
tious streamlet seen to wind its romantic course through the heart of an ideal city, 
thus creating water lots and water privileges. But where a real stream, no matter 
how diminutive, did find its way to the shore of the lake no matter what was the 
character of the surrounding country some wary operator would ride night and 
day until the place was secured at the government price. Then the miserable waste 
of sand and fens which lay unconscious of its glory on the shore of the lake was sud- 
denly elevated into a mighty city, with a projected harbor and lighthouse, railroads, 
and canals, and in a short time the circumjacent lands were sold in lots of 50 by 
100 feet, under the name "additions." Not the puniest brook on the shore of Lake 
Michigan was suffered to remain without a city at its mouth and whoever will 
travel around that lake shall find many a mighty mart staked out in spots suitable 
only for the habitations of wild beasts. 87 

Within the present city limits of Chicago, Figure 5 shows town sites 
were laid out in 1836 at Canalport (Ashland Avenue from Twenty- 
second to Thirty-first street), Cottage Grove (Thirty-first Street and 
the lake), Calumet (Ninety-fifth Street and the lake), and Summit 
(Fifty-first and Harlem Avenue, just outside the present city limits), 
all of these being either on the Lake or on the route of the proposed 
canal. The supply of lots near Chicago was increased in 1836 by the 
subdivision of Fractional Section 15 (from Madison Street to Roose- 
velt Road, State Street to Michigan Avenue), and by the opening of 
Carpenter's Addition (northwest corner of Madison and Halsted 
streets) and Duncan's Addition (northeast corner of Halsted and 
Roosevelt Road). Fractional shares of unsubdivided lands amounting 
to as little as one-thirty-second of a quarter-section were bought and 
sold. "Every man who owned a garden patch stood on his head and 
imagined himself a millionaire." 88 

The method in which a boom psychology is generated within a close 
compass by the interaction between minds obsessed with the same 
beliefs was as well illustrated in 1836 as in later periods of speculative 
enthusiasm, as the following account shows: 

A powerful auxiliary to the speculative spirit was the sale of lands by auction. 
Where bodies of men, actuated by a common motive, assemble together for a com- 
mon object, zeal is apt to run to enthusiasm when the common passion is artfully 

8 ? Andreas, op. cit., I, 135. 88 Ibid., p. 137. 



MAP OF CHICAGO 

- SHOWING - 



ORIGINAL SUBDIVISIONS 
1830 TO 1843 



LEGEND FOR DATA 

TOWN OF CHICAGO 



HER. ROBERTS AOOlTlON It}) 
WOLCOTT S ADDITION 1635 
BUSHMELL'S ADDITION l3 

NTER'S ADDITION !} 
() FRACTIONAL SECTION IS ADDITION 183ft 

CANAL TRUSTEES SUBDIVISION S3TM R>4 1C) 
DUNCAN-! 

PORT (VACATED LATER 



CALUMET AND CEORCt l36 
(.VACATED LATER) 

(M)TOWN or COTTAGE GROVE (VACATED LATER) ift3 
OS)TOWN or SUMMIT laa? 




FIG. 



THE CANAL LAND BOOM 33 

inflamed by a skillful orator, enthusiasm becomes fanaticism, and fanaticism, mad- 
ness. Men who wish to be persuaded are already more than half won over, and an 
excited imagination will produce almost any anticipated result. Popular delusions 
have carried away millions at a time, mental epidemics have raged at every period 
of the world's history and conviction has ever been potent to work miracles. Now 
the speculating mania was an epidemic of the mind, and every chord struck by the 
chief performers produced endless vibrations, until the countless tones of the full 
diapason broke forth into maddening strains of fascination. The auctioneers were 
the high priests who sacrificed in the Temple of Fortune, through them the specu- 
lators spread abroad their spacious representations. Like the Sibyls and Flamens 
of old they delivered false oracles and made a juggle of omens and auguries. 89 

Thus the dazzling tales of fortunes quickly made, the pyramiding of 
land profits made possible by the constant emission of state bank notes 
that created an ever higher structure of land values and the reports 
of the national speculative mania that were circulated by every traveler 
were used by skilful auctioners to raise local buyers to the highest pitch 
of excitement. Figures 6 and 7 show some of the detailed sales of lots 
and acreage tracts at the peak in 1836. These prices may be compared 
with the initial prices in 1830 of $100 for the best town lot and $1.25 an 
acre for quarter-sections adjacent to the present "Loop." To present a 
picture of the changes in land values in that period for the entire area 
within the present city limits, an estimate of the total value has been 
made on the basis of these sample sales. 

A survey of the summit. By the summer of 1836 the total sales value 
of the land in the present city limits of Chicago had increased from the 
$168,800 value of 1830 to $10,500,000, a rise of over sixty fold. Of this 
amount 56 per cent, or 5,900,000, represented the value of the 2.5 
square miles within a mile of State and Madison streets. At the prices 
prevailing on June 20, 1836, the whole of the Original Town alone was 
worth $2,650,000 and the School Section which had sold for $38,000 in 
1833 had advanced in value to $i,2oo,ooo. 9 The average advance on 
these tracts had been a thousand fold since 1830, and the lots along the 
river had exceeded even this startling rate of increase. The highest 
values had been reached at South Water and Dearborn, where a 3.5- 
acre block at the drawbridge over the river had reached an aggregate 
value of $152,000, and at LaSalle and South Water, where two lots 
were reported to have sold together for $ioo,ooo. 91 Successive blocks 

8 Ibid ., p. 135. 

90 See Figs. 71 and 73 for detailed sales and valuations of 1830-36. 

" Andreas, op. cit., I, 137. 



MAP OF CHICAGO 

-SHowiNG- 



VALUES -1836 

AVERAGE VALUES FOR EACH SQUARE MILE IN DOLLARS PER ACRE 
SOURCE' ACTUAL SALES 



* 1 ',.1-5- 15 j 20 ! 20 j 20 j 25 




FIG. 6 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES -1 836 
INDICATED BY SALES OF ACRE TRACTS 



LEGEND 



LOCATION AND EXTENT OF AREAS SOLD. 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 
SQUARE MILE SECTION 




<H STffffT 

n truce r 



FIG. 7 



36 ONE HUNDRED YEARS OF LAND VALUES 

southward from State and South Water streets had sold at the rate of 
$100,000 for whole blocks at Randolph, $46,000 at Washington, $23,000 
at Madison, and $6,000 at Roosevelt Road. On the North Side the 
most valuable lots were on the north bank of the river, where entire 
blocks ranged in value from $50,000 to $100,000, north of which they 
declined sharply in value. On the West Side in the Original Town the 
highest values again were to be found in the blocks next to the river, 
a block on the south branch at Lake Street being valued at $70,000 and 
successive blocks going westward to Desplaines declining to $29,000, 
$19,000, and $i4,5oo. 92 

For these high values there was some income justification, for stores 
in the best locations near Dearborn and South Water rented for from 
$1,000 to $1,500 a year in i836, 93 but with interest rates at not less than 
10 per cent per annum on the best security, it was observed at the time 
that this income was overcapitalized. 

The next belt of 6.5 square miles, or 4,140 acres, that formed a 
hollow square a mile wide around the inner center reached an average 
value of $500 an acre, or slightly over $2,000,000, by the summer of 
1836. This represented an increase of four hundred fold for this vacant 
area since 1830. The land in the n -square-mile belt (7,000 acres) that 
was from 2 to 3 miles from State and Madison streets rose in value 
nearly one hundred times to an average of $116 an acre, or a total of 
$816,640 by 1836. The land in the i4.5-square-mile belt (9,220 acres) 
that was from 3 to 4 miles from State and Madison streets advanced to 
an average value of $50 an acre, and a total value of $416,000, an 
average increase of forty fold since 1830. 

Finally, all of the 175 square miles within the present city limits that 
were farther than 4 miles from State and Madison streets, representing 
over 80 per cent of the present area of the city, attained an average 
value of only $12.50 an acre by the fall of 1836, an average advance of 
tenfold. While tracts in this belt lying nearest the lake and the town 
had risen as high as twenty and forty fold, great areas 8 or 10 miles from 
the center of town were valued at but little more than the original gov- 
ernment minimum price of $1.25 an acre. Apparently even the most 
vivid speculative imagination of that time could not conceive of a city 

92 See maps of the Original Town giving sales for lots in each block (Figs. 73 and 74). 

93 Chicago American, July 9, 1836. 



THE CANAL LAND BOOM 37 

that would grow so far from the river and the lake that these acres 
would be needed for urban use. These 112,000 acres, therefore, had a 
value of only $1,400,000 in 1836, or only 13 per cent of the total land 
value of Chicago, although they embrace over 80 per cent of its present 
area. 

Thus in the first land boom of 1836, values rose to the peak along the 
Chicago River and its branches, where land was worth eight to ten 
times as much as land half a mile back, twenty-five times as much as 
land a mile away, two hundred times as much as land two miles away, 
fifteen hundred times as much as land seven miles away, and twenty- 
five hundred times as much as land ten miles away. 

The lull. The course of prices indicates that the period of most rapid 
advances in values ended in July of 1836, but that a slow advance was 
maintained up to the very end of the year. 94 On June 20, 1836, the bids 
on the lots in the Original Town in most cases exceeded even the high 
valuation placed upon them by the Canal Commissioners, 95 but on 
September 5, 1836, the bids on the lots then offered for sale fell short of 
the Commissioners' appraisals. For some months there was a lull, in 
which the volume of sales greatly declined, during which speculators 
sought to perpetuate the high plateau of values that had been estab- 
lished by the last sales. Even on May 26, 1837, William B. Ogden 
wrote that "my sales this spring thus far amount to over $12,000 at 
full last year's prices," 96 indicating that the peak of values was being 
maintained with difficulty at that time. 

The forces of depression. On the eve of a severe financial crisis, the 
state of Illinois on February 27, 1837, had recklessly plunged into a 
program of internal improvements which called for gridironing the 
state with 1,341 miles of railroads at an estimated cost of $10,250,00 for 
which state bonds were to be issued. All parts of the state had de- 
manded a share in the benefits which the Illinois and Michigan canal 
was expected to confer on the Chicago region, with the result that the 

94 "Speculation reached its height in the latter part of 1836" (Norris, Business Directory 
and Statistics of the City of Chicago, 1846 [reprinted by the Fergus Printing Co., Chicago, 
in 1883], p. 53). 

9s Chicago American, July 23, 1836. 

6 Letter to Frederick Bronson, May 26, 1837 (William B. Ogden, Letter Books, I, 22 
[original in the Chicago Historical Society]). In the same letter Ogden also says: "I know 
of no sales or very few at full prices except some that I now and then make because of being 
able to suit the purse and give the time that persons applying desire." 



38 ONE HUNDRED YEARS OF LAND VALUES 

success of that undertaking was jeopardized and the credit of the state 
impaired by a program too great for its existing resources. At first 
money was borrowed in New York and from the United States Bank in 
Philadelphia to carry on the scheme, and then when no more bonds 
could be sold, the legislature increased the capital of the Bank of Illinois 
of Shawneetown by $1,400,000 and that of the State Bank of Illinois 
by $2,000,000 and required these banks to exchange this additional 
capital stock for state bonds. Thus the project of the Illinois and Mich- 
igan canal upon which the hopes of Chicago depended became inter- 
woven with a grand plan of internal improvements. The fate of that in 
turn became involved in the fate of the state banks and the state bonds. 

Meanwhile, the existing volume of currency pouring forth from the 
banks to sustain the expanded structure of land values was greater than 
could be redeemed in specie. As early as May, 1836, the secretary of the 
Treasury had issued an order directing the land offices to refuse to ac- 
cept the bills of non-specie-paying banks in payment for public lands. 
In the beginning of May, 1837, there was a general tightening of the 
money market followed by a suspension of specie payments by the 
banks of New York, which swept southward and westward until it 
reached St. Louis by May 22. 97 On May 29, 1837, the Illinois banks 
voted to suspend specie payments for an indefinite period, and the state 
legislature acquiesced in this suspension by a special act. 

Under these conditions it soon became impossible to borrow money 
on real estate or to renew existing loans. Ogden reported in a letter of 
May 26, 1837, that "money is very scarce indeed," but by November 
23, 1837, he was obliged to write that "I am not aware that a loan of 
money can be obtained of anyone here or elsewhere at this time at any 
rate of interest." 98 The sales at the land office in Chicago which had 
amounted to 370,043 acres in 1835 and 436,992 acres in 1836 dropped 
to 15,618 acres in 1837." Still there were as yet no distress sales and no 
drastic declines in land values. In 1838 business improved temporarily 
and the Illinois banks, after a suspension of thirteen months, resumed 
specie payments on August 13, i838. IO Only 17,640 acres were sold by 
the Chicago land office in 1838, however, and very few sales were made 
in Chicago itself. 

97 Dowrie, op. cit., p. 83. 

9 Letter to A. McGregor, November 23, 1837 (Ogden, op. cit., I, 55 [original in the Chi- 
cago Historical Society]). 

99 Pease, op. cit., p. 176. " Dowrie, op. cit., p. 87. 



THE CANAL LAND BOOM 39 

The sharp decline. Another financial crisis swept through the coun- 
try in the autumn of 1839, however, and after the news of the suspen- 
sion of banks in the East had reached Springfield, the Illinois banks 
again suspended specie payments on October 20, i839. 101 Local condi- 
tions in the meantime had grown much worse, for the State Bank of 
Illinois which had been relied upon to make profits to sustain the credit 
of the state and to carry on the work of internal improvements had 
lost $1,000,000 in an attempt to corner the lead market in 1839, and the 
state, in addition to a $5,000,000 debt incurred in digging the canal, 
had spent $6,000,000 on its other projects of internal improvements 
which ultimately yielded it nothing. 103 That real estate values had de- 
clined drastically could no longer be concealed by 1839. The extent of 
the decline was revealed when the government insisted on selling the 
Fort Dearborn reservation the land north of Madison Street and east 
of State Street in the depressed market of i839 103 an d received from 
$200 to $500 a lot, or a total of $100,000 for land that would have 
brought over $900,000 in 1836. Ogden in the latter part of 1839 valued 
the southwest corner of Dearborn and Randolph, which had sold for 
$7,800 in 1836, at $350 at a fair valuation and $200 at a forced sale, 
saying that "I have valued this property hitherto at higher rates than 
now .... but when no one has any money to buy property at any 
price without reference to what will be its conceded value after a little 
change in an extreme condition of things, it at least seems questionable 
as to the propriety of estimating it at the merely nominal price which it 
will bring at the present moment." 104 In November, 1839, Ogden esti- 
mated that the best business property had declined 75 per cent in 
value since 1836 and that outlying lands had fallen from 90 to 95 per 
cent from the peak prices. 105 

Except for the Fort Dearborn Addition, arbitrarily dumped on the 
market by government order, there were no new subdivisions from 1837 

101 Ibid. Ma Ibid., p. 88. 

I( * Letter of William B. Ogden to Charles Butler, June 17, 1839 (Ogden, op. cit., II, 105) : 
"The very low price at which the Beaubien property [i.e., the Fort Dearborn reservation] 
has been selling during this and the past week, will for the present stop all sales of other lots 
except at greatly depressed prices." 

104 Letter to M. J. Williams, January 10, 1840 (ibid., p. 310 [original in the Chicago His- 
torical Society]). 

1( * Letter to Charles Butler, June 1 7, 1839 (ibid ., p. 106) : "One fourth of 1836 prices can 
hardly be obtained for much business property at this time and one loth to a 20th is about 
all out town property will bring or is worth compared to sales of 1836." 



40 ONE HUNDRED YEARS OF LAND VALUES 

to 1843. Tne three square miles already cut up into lots provided 
enough land for at least fifty thousand people when there were only 
four thousand in the city. 106 "Town lots" became a cry of derision, and 
the fate of much of this property was pointed out by a reporter who 
observed : 

In taking a stroll last week up the beautiful avenue, Clark Street beyond the 
School Section [i.e., south of Roosevelt Road], we observed a considerable portion 
of the beautiful prairie, which in the eventful days of speculation was staked out 
and held as thousand dollar city lots without bringing in a cent, is now plowed up 
for potato patches and purposes of cultivation. 10 ? 

The bottom had not yet been reached, however, nor the extent of the 
land-buyer's ruin fully realized. It had become increasingly difficult to 
keep the work on the canal going, the other schemes of internal im- 
provements were breaking down, and the credit of the state and the 
state banks was sinking lower and lower. In January, 1840, Ogden 
wrote as follows: 

No satisfactory valuation can be fixed on the three lots at this time because there 
are no purchases of real estate generally in this vicinity except for immediate use, 
and a future demand for this property is based chiefly upon the completion of the 
canal, which is at present of very uncertain result. 108 

Again he writes at about the same time : 

It is not at all the town it was, though the exterior has increased in beauty ma- 
terially. That buoyancy of feeling and liberal and generous bearing of its people 
have given way to a close, calculating and care-worn spirit. Its ancient dynasty 
have mostly fallen and men and families of more recent date seem a good deal in the 
ascendant. It seems as if there was scarce one left to escape the blight and mildew 
of 1836. Either as principal or endorser or from confidence unworthily bestowed, 
all suffer and too often to their ruin."* 

The bottom. By 1841 and 1842 the extreme low ebb of state finances 
and of Chicago land values had been reached. The contractors who 
were digging the canal accepted checks of the Commissioners bearing 
6 per cent interest in lieu of cash, and in 1840 accepted $1,000,000 

106 Three square miles or 1,920 acres or 19,200 lots, 25 by 125 feet, would provide resi- 
dential land enough for nearly 100,000 persons if a family of five lived on each lot. Since 
there was an average of ten persons to each residential building in Chicago in 1837, and most 
of the population live on 100 acres of land, this estimate of the number of people that could 
be housed on the subdivided land is conservative. 

107 Chicago American, April 22, 1839. 

108 Letter to J. W. Seaver, January 14, 1840 (Ogden, op. cit., II, 317 [original in the Chi- 
cago Historical Society]). 

""Letter to Captain James Allen, January 15, 1840 (ibid., p. 321). 



THE CANAL LAND BOOM 41 

worth of state bonds at par when they were at a discount of 15 per 
cent; 110 but when the state failed in May, 1841, to provide any further 
means for financing the canal, practically all the work came to an end 
in November, 1841. The State Bank of Illinois failed in February, 
1842, and by April, 1842, the value of its notes had fallen from 85 cents 
to 44 cents on the dollar. 111 The state now owed $14,000,000, and with 
widespread demands for repudiation of its debt, its bonds dropped by 
June, 1842, to 1 8 cents on the dollar, 112 while the bills of the State Bank 
sold for 34 cents on the dollar at the same time. The Bank of Illinois 
of Shawneetown also suspended its operations in June, 1842, and soon 
thereafter the whole program of internal improvements was abandoned. 

When the work on the canal stopped, one paper announced, " Specu- 
lation has received its deathblow." Foreclosures had constantly in- 
creased until the banks of Illinois, which held only $8,296 worth of real 
estate in 1836 and only $57,138 worth in 1839, had acquired by fore- 
closure land to the value of $534,421 by 1841, and land worth $1,243,- 
327 by i843. 113 The buyers of canal lots, unable to meet their payments 
in 1837, had their time of payment extended by special act of the legis- 
lature in 1837. As this relief was of little avail by the time land values 
had declined drastically, the legislature again came to their relief in 
1841, first by deducting one- third from the price they had agreed to 
pay in 1836, and, second, by allowing them to apply all the money they 
had paid in toward the full payment of one lot or one portion of a lot, so 
they received a clear title to at least one piece of land in return for what 
they had spent." 4 

A survey at the bottom. The bottom was reached in 1842. IIS The to- 

110 Putnam, op. cit., p. 285. 

111 Dowrie, op. cit., p. 103; Sangamon Journal, April 8, 1842 

112 Chicago Democrat, June 8, 1842. 

"3 Report of the Comptroller of the Currency (1876), p. 118. 

"4 Laws of Illinois, 1841 (i2th General Assembly; Springfield, 1841), pp. 49-51. 

115 Colbert estimates that they dropped to 5 per cent of the 1836 peak: "The next year 
[1841] work was suspended on the canal and the situation became more gloomy than ever, 
real estate being offered at less than 5 per cent of the price paid in 1836" (Colbert and 
Chamberlin, Chicago and the Great Conflagration, p. i); "In 1842 real estate had but little 
value, and everybody would have been rid of it but nobody else would take it, and so being 
obliged to keep what they had, an abundance of people were made rich in spite of them- 
selves" ("Fergus Historical Series," No. 5, Part II, p. 16: "Life of Benj. W. Raymond"); 
William Bross, History of Chicago, p. 17: "Real estate went down to a very low figure, 
reaching bottom in 1842." 



42 ONE HUNDRED YEARS OF LAND VALUES 

tal land value, according to sales, in the Chicago region had dropped 
from the $10,000,000 level of 1836 to $i,4oo,ooo." 6 Except for the dis- 
tant land near the present city limits that had hardly risen at all in the 
boom of 1836, the shrinkage in land values had been remarkably 
uniform. Land values within the first-mile belt dropped from $5,901,- 
ooo to $810,000, in the second-mile belt from $2,070,000 to $207,000, 
in the third-mile belt from $817,000 to $70,000, in the fourth-mile belt 
from $461,000 to $46,000, and in the outer belt from $1,400,000 to 
$269,000. 

The value of the best business location in Chicago, on Lake and 
Clark, did not exceed $100 a front foot in 1842, while most of the land 
in the present Loop, north of Madison, was worth no more than $10 a 
front foot and that south of it $2.00 or $3.00 a front foot. As Figure 8 
shows, acres within a mile of State and Madison were worth no more 
than $100 an acre, within two miles they dropped to $10 an acre, and 
beyond four miles they were worth not over $2.50 an acre. 

The aftermath. The effect of this extreme decline in land values was 
to ruin most of those who bought land in Chicago prior to 1836. John 
S. Wright lost all of his land, valued at $200,000 during the boom of 
1836, and worth at least $1,000,000 in 1856, because of his inability to 
meet obligations of $25,ooo." 7 Philo Carpenter parted with land later 
worth over $1,000,000 to satisfy a debt of $8,5oo." 8 Ogden wrote on 
January 25, 1841: 

As regards Chicago, everything has changed mightily since you left. Property 
has depreciated monstrously. It often happens that property which sold for hun- 
dreds, even thousands, is not now worth even ten dollars. Those too who were the 

richest when you left are of the poorest now Very few of the old stock of '36 

are otherwise than deeply embarrassed We are all narrowed to picayune 

operations, and have hard work to make our ends meet and get our daily bread, 
cheap as it is now. So much for unhallowed speculations. 119 

As the reporter for the Chicago Journal stated: "When reverses came 
upon our business men, it was almost a universal crash and ruin that 
followed, few old settlers, those who had borne the heat and burden of 

116 Computed by the writer on the basis of sales. 

"7 Andreas, op. cit., I, 136, John S. Wright, Chicago, Past, Present, Future (Chicago? 
1870), p. 290. 

118 Early Chicago and Illinois ("Chicago Historical Society's Collection," Vol. IV), p. 1 19. 

"' Letter to H. Moore, January 25, i84i;(Ogden, op. cit., Ill, 159 [original in the Chi- 
cago Historical Society]). 



MAP OF CHICAGO 

-SHOWING - 

LAND VALUES-I84I TO 1843 
INDICATED BY SALES OF ACRE TRACTS 



LEGEND 



LOCATION AND tXTENT OF AREAS SOLD. 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 
SQUARE MILE SECTION 




I I 



FIG. 8 



44 ONE HUNDRED YEARS OF LAND VALUES 

the day, were enabled to regain themselves." 120 Joseph N. Balestier 
melodramatically described the debacle in the following words: 

But the day of retribution was at hand, the reaction came and the professional 
speculator and his victims were swallowed up in one common ruin. Trusting to the 
large sums due him, the land operator involved himself more and more deeply, until 
his fate was more pitiable than that of his defrauded dupes. 

The year 1837 will ever be remembered as the year of protested notes 

Misery inscribed its name on many a face but lately radiant with high hopes, de- 
spair was stamped on many a countenance which was wont to be wreathed in smiles. 
Broken fortune, blasted hopes and, aye, blighted characters; these were the legiti- 
mate offspring of those pestilent times. The land resounded with the groans of 
ruined men, and the sobs of defrauded women who had entrusted their all to the 
greedy speculators. Political events, which had hitherto favored these wild 
chimeras, now conspired to hasten and aggravate their downfall. 121 

Such was the aftermath of the boom of 1836. Land values had 
plunged from one extreme to another, and in the depression of 1841 and 
1842, the land value of Chicago was too cheap not merely in the light 
of its subsequent history but even for the modest prospects of a county 
seat. Those who had suffered so severely, however, would be inclined to 
put a damper on any further speculative tendencies, and when all hope 
for completing the canal had been abandoned, there seemed to be 
nothing to look forward to that would cause land values in Chicago to 
move upward. As Ogden wrote late in 1841: "The suspending of the 
canal and the bankruptcy and disgrace entailed by the wicked and wan- 
ton legislation of the past winter have put another face of deepened 
gloom upon the values of property here and will work a perfect dearth 
of money and make all real estate in the main unavailable." 122 

120 March 27, 1845. m Andreas, op. cit., I, 135. 

122 Ogden, op. cit. (original in the Chicago Historical Society). Note also the effect of the 
suspension of the canal upon population and rents (letter to B. Mager, June 27, 1841 

[ibid ., Ill, 326]) : "Many people are leaving town Houses are vacant." Letter to 

Dr. U. Parsons, June 7, 1841 (ibid., p. 323) : "The suspension of the canal has reduced rents 
this year greatly." Originals of both letters are in the Chicago Historical Society. William B. 
Ogden, the first mayor of Chicago, and the first president of the Chicago Northwestern 
Railroad, was one of the most prominent of the early citizens of Chicago. Ogden, Utah was 
named after him. At this time he invested large sums of eastern capital in western lands. 



CHAPTER II 
THE LAND BOOM OF THE RAILROAD ERA, 1843-62 

A. THE PERIOD FROM 1843 TO 1848 

A new start on the canal. When the prospect of completing the Illi- 
nois and Michigan Canal, apparently involved in the wreck of the 
state's grandiose scheme of banking and internal improvements, had 
been abandoned, the death knell of the plans of Chicago to become a 
great metropolis seemed to have been sounded. The value of its real 
estate sank to its lowest depths. Of all the projects contemplated by 
the state, however, the canal, upon which over $7,000,000 had already 
been spent, was the only one that had been pushed far toward comple- 
tion. Moreover, it alone possessed in its own right any assets, it still 
having 230,476 acres of land and 3,491 town lots which had not been 
sold or mortgaged during the depression. 1 Fortunately for the canal 
and for Chicago, three different groups found it to their interest to 
unite to complete the waterway. These were, first, the citizens of Chi- 
cago, who fondly expected that the canal would make the city a great 
emporium; second, the bondholders, who had already sunk their money 
into the enterprise and who by putting in a little more might recover 
their entire investment; and, third, the state, which by opening up a 
profitable market for the products of the Illinois River Valley would 
enable the farmers to pay the taxes that would enable the state to meet 
its obligations. It was estimated that the canal could be completed on 
the shallow-cut plan at an additional cost of $1,600,000, and to procure 
this sum the state legislature in February, 1843, authorized the gover- 
nor to borrow that amount on the security of the canal lands and tolls. 
As an inducement to the old bondholders in London from whom it was 
hoped to secure most of the money, the law provided that if the holders 
of the original-canal obligations subscribed to the new loan, the princi- 
pal and interest of their old obligations would be repaid from the pro- 
ceeds of the sales of the canal lands and from canal tolls after the princi- 

1 James William Putnam, The Illinois and Michigan Canal, 1918 (Chicago: University 
of Chicago Press, 1918), p. 58. This is the most authoritative work on the subject of the 
Illinois and Michigan Canal. 

45 



46 ONE HUNDRED YEARS OF LAND VALUES 

pal and interest of the new loan had been paid. Since nearly everyone 
believed that the canal lands would appreciate in value after the com- 
pletion of the canal, the law provided that none of the canal land was 
to be sold until after the canal was finished, but that thereafter the land 
was to be offered for sale at least once a year for four years after the 
canal was opened, at prices not less than those fixed by three disinter- 
ested persons in each district. 2 On these overtures from the state, a 
committee from Baring Brothers, representing the old bondholders, in- 
vestigated the financial condition of the canal and reported that on 
January i, 1844, it had a net debt of $4,847,402 and countervailing 
assets in the canal itself and its lands and lots of over $9,000,000. They 
accordingly recommended that the London bondholders advance the 
sum required to finish it. 3 

Before the complete confidence of these financial interests could be 
won, however, it was necessary not merely for the state to abandon all 
its other projects of internal improvements and to begin to reduce its 
debt by exchanging its stock in the state banks for the state bonds held 
by the banks, but also to win the fight against repudiation of its obliga- 
tions by providing in 1845 f r a m iU tax to pay the interest on its public 
debt. After these steps had been taken and the credit of the state had 
rapidly improved in consequence, the new loan for the canal was ad- 
vanced in 1845. With the joyful shout of the Chicago Journal, "Get out 
your spades and go digging," 4 the work was resumed. As wages and 
the price of materials were low as compared with the high levels pre- 
vailing in 1836 and 1837, the funds provided proved to be ample. The 
long-deferred task was now pushed to completion in the scheduled 
time of two and a half years. 

Growth of wagon and lake traffic. While thus being encouraged by 
the prospects of better transportation facilities in the future, Chicago 
was forging slowly ahead as a meeting place of wagon-hauled and lake- 
borne commerce. Prior to 1837 the territory in the vicinity of Chicago 
did not raise enough food for its support. That was the first era. 
Charles Cleaver said: 

3 Laws of the State of Illinois (i3th General Assembly; Springfield, III, 1843), PP- 54~58. 

3 Putnam, "Economic History of the Illinois-Michigan Canal," Journal of Political 
Economy, XVII (1909), 290, quotes Davis and Swift, Report of the Illinois-Michigan Canal 
(1844), p. 134. 

* March 3, 1845. 



THE RAILROAD ERA 47 

From that time to 1842 or 1843 farmers began to raise enough produce for them- 
selves and their neighbors' consumption as well as supplying the citizens of Chicago 
with all that was necessary, but these years began to show the necessity of having 
some foreign market to take off the surplus produce, for in the winter of 1842 to 

1843 farmers' produce of all kinds was so low it was hardly worth raising 

Gradually all classes of produce were held till spring for shipment round the lakes by 
vessel to New York; this would end the second era.s 

As the population of northern Illinois was rapidly increasing and its 
farm lands were being developed, the best market for farm produce was 
in Chicago. There the highest prices in the West were paid for wheat 
that was shipped to the East on lake vessels and there the lowest prices 
were charged for salt, cook stoves, lumber, and other farm necessities. 
The relatively lower cost of lake transportation between Chicago and 
the East made Chicago grain prices only a little less than those in New 
York and the prices of eastern wares in the Chicago stores only a little 
more than at the point of their origin. The greatest part of the expense, 
however, was involved in getting the wheat or produce to Chicago, be- 
cause it had to be hauled there in wagons over bad roads. 

Farmers living on Rock River would take five days to market thirty bushels of 
wheat, finding when they got home not over ten or twelve dollars left out of the 
price of their load, but for some purposes they had to have a little cash and so con- 
tinued to bring it. 6 

Notwithstanding the difficulties involved in this long movement by 
wagons, the volume of wheat thus brought to Chicago rapidly increased. 
The export of 78 bushels in 1838 had mounted to 40,000 bushels by 1841 
and 587,000 bushels in 1842. Over 1,000,000 bushels were shipped East 
in 1845 and over 2,000,000 bushels in 1847. 7 

In addition to the farmers hauling in wheat that was mainly exported 
to the East, there were the farmers from the Wabash country who 
brought in provisions chiefly for local consumption. 

There was also another class of farmers from the south that used in a measure 
to supply the city with necessaries in the shape of green and dried apples, butter, 
hams, bacon, feathers, etc. These men would bring their loads two or three hundred 
miles, camping out on the way. Cooking their rasher of bacon and corn dodgers, 
and boiling their pot of coffee over the campfire and saving money enough out 
of their load to purchase a few bags of coffee and the balance in salt this was the 

* Reminiscences of Chicago in the Forties and Fifties, p. 74. 

6 Ibid., p. 75. 

7 Hunt's Merchants' Magazine, 1858, p. 422. 



48 ONE HUNDRED YEARS OF LAND VALUES 

invariable return load of all Hoosiers, who used to come in great numbers in their 
curious shaped covered wagons, known in old times as prairie schooners I once 
counted 160 on the corner of State and South Water Street. 8 

One of the most important commodities which the farmers hauled 
back in their wagons was lumber. White-pine timber from the forests 
of Michigan was brought in by lake vessels to make good the deficiency 
of the prairie states. The lumber receipts of Chicago increased from 
7,500,000 board feet in 1843 to 19,000,000 board feet in i844 9 and 
32,000,000 board feet in 1847. 10 This incoming lumber traffic and the 
outgoing wheat shipments as they thus mounted rapidly in volume 
caused an increase in lake tonnage arriving at Chicago from 117,711 in 
1842 to 459,910 in 1844." 

Even in the forties when the conditions of land transportation were 
most difficult, a heavy flow of people and goods passed through Chica- 
go. Not only the movement of farmers' wagons, which increased until 
70,000 teams entered Chicago in 1847, an average of 200 a day, 12 but 
the arrivals and departures of emigrants by stagecoach and steamers 
brought a large throng of transients into the city. In 1845 it was esti- 
mated that four steamboats entering and leaving Chicago every day 
carried 430 persons or 92,000 during the seven months of navigation, 
while the eight stages that arrived and departed daily transported 120 
persons a day or 43,800 a year. 13 

The purchases of farmers and of emigrants at the stores on Lake 
Street gave rise to a large volume of retail business in Chicago prior to 
1848. 

Previous to the opening of the canal, the communication with the country dis- 
tricts was almost altogether by farmers' wagons or prairie schooners. In the fall 
after the harvest and threshing season, the prairie roads leading to Chicago from 
all directions were lined with Hoosier, cloth-covered wagons. In the city, Lake 
Street was the only real business street and that was literally packed with these 
wagons threading their way in a perfect jam. They came in with wheat, corn, oats 
and all other farm products and departed with a cook stove, a barrel of salt or a few 

8 Cleaver, op. cit., p. 75. 

' Norris, City Directory for 1846, p. 15. 

10 Hunt's Merchants' Magazine, 1858, p. 428. Ibid., p. 421. 

" History of the Board of Trade, ed. Charles H. Taylor (Chicago: Robert O. Law & Co., 
1917). 

13 Norris, Directory for Chicago for 1846, p. 24. 



THE RAILROAD ERA 49 

boards of pine lumber, which could only be had at Chicago. These farmers sup- 
plied a very large part of the retail trade of Chicago. Wholesale trade was not then 
known as such. 1 * 

The demand of the fanners for commodities not merely increased the 
retail trade, but in conjunction with lumber imports it also stimulated 
the growth of such wood manufactures as wagons and agricultural im- 
plements, McCormick establishing his reaper works in Chicago in 1847. 
The flow of grain and live stock into Chicago also caused the develop- 
ment of local flour mills, breweries, packing-houses, soap and tallow 
plants. 

The physical growth of Chicago, 1843-48. After the population of 
Chicago had grown from 5,000 in 1841 to 6,000 in 1842 and 8,000 in 
i844, IS the appearance of the city in 1844 was thus described: 

The then mighty city with its "teeming multitudes" of 8,000 people was strung 
along the banks of the river for half a mile from the lake. It hadn't a paved street 
or a foot of brick sidewalk. The business part of the town was Lake Street from 
State to Wells Street, and the residences were scattered along Wabash and Michi- 
gan and State to Washington Streets. What is now Madison Street was out of 
town. South of where the Grand Pacific stands was an unbroken prairie. There 
was no business and only a few dwellings north of the river, on account of the un- 
certainties and delays in getting back and forth. There was no sewerage whatever 
and the water and the surface drainage was the only way to get rid of sewage. The 
mud is described as having been simply horrible. The low marshy land filled with 
water like a sponge and the streets were well-nigh impassable for eight months in 
the year. 16 

An analysis of the place of residence reported by the 2,000 persons 
whose names appeared in the city directory in 1844 shows that of the 
1,200 giving definite addresses, 180 lived in hotels and 275 in boarding- 
houses or with their employers. 17 Only 5 reported living south of 
Adams Street, i west of Clinton Street, and 7 as far north as Chicago 
Avenue. There was a concentration of residential population on Ran- 
dolph and Washington streets, from State to Market Street, on North 
Water Street from LaSalle to Rush Street, and on the West Side near 
the Lake Street bridge. Nearly every business house reporting was 
either on Lake Street or on Clark and Dearborn streets between Lake 
and South Water streets. There were twenty-five commission mer- 

' I. W. Waughop in Chicago Tribune, September 28, 1884. 

15 Charles Colbert in Andreas, op. cit., II, 691. 

16 Chicago Herald, September 25, 1882. '? Norris, City Directory for 1844. 



50 ONE HUNDRED YEARS OF LAND VALUES 

chants on South Water Street. The lumber yards were mainly on the 
south side of the river, from Wells to Randolph Street. 

In 1844, 600 new buildings were erected, and in 1845, 8? 1 - The popu- 
lation had increased from 8,000 in 1844 to 12,000 in 1845 an d 14,000 in 
1846. William Bross painted the following picture of Chicago in 1846: 

The residence portion of it [Chicago in 1846] was mainly between Randolph and 
Madison Streets, and there were some scattered houses as far south as Van Buren 
Street in the South Side, four or five blocks north of the river on the North Side, 
with scattering residences about as far on the West Side. There were, perhaps, half 
a dozen wooden warehouses along the river on Water Street. The few stores that 
pretended to be wholesale were on Water Street, and the retail trade was exclusively 
done on Lake Street. 18 

The growing lumber firms were locating on the west side of the south 
branch from Lake to Washington Street, as well as on the east side of 
the south branch as far south as Washington Street. Foundries, sash 
and door mills, and flour mills were getting started on the West Side by 
1846. Wagon works were established on Randolph near Franklin and 
Market streets. On the North Side was a shipyard near Rush Street, 
iron foundries on North Water from Clark to Wells, and breweries on 
the lake front at Illinois Street and Chicago Avenue. The growth of the 
South Side and the West Side in population was greater than that of the 
North Side from 1843 to 1845, as Table I shows. 19 

In 1846, according to Norris, three-fourths of the ground within the 
city limits was more or less built upon, and there were twenty blocks 
that were compactly occupied with buildings. There were thirty- two 
large brick buildings three or four stories in height, and numerous 
blocks of wooden buildings. 30 

The River and Harbor Convention held in Chicago in 1847, which 
brought delegates from all over the United States to the city, was one 
of the most important events in its early annals, for it drew the atten- 
tion of the East to the substantial growth of Chicago within the past 
decade. 

By 1848 the West Side was growing fast as a manufacturing center. 
"The West Side near the south branch of the canal draws houses, 
stores, machine shops, planing mills toward it as a magnet draws iron 
filings," was the statement appearing in the "Gem of the Prairie" in 

18 Chicago Tribune, June 24, 1876. 

' Norris, City Directory for 1846. M Ibid., p. 5. 



THE RAILROAD ERA 



1848." The fashionable residential areas were on the North Side on 
LaSalle and Dearborn streets, Case and Pine streets, and on the South 
Side on Wabash and Michigan avenues, north of Madison Street. 
Washington had developed into a street of churches. Madison and 
Monroe streets in the present "Loop" were occupied by small houses 
surrounded by gardens. Lake Street was still the main business street. 
The first slums and vice areas were developing in the "sands" north of 
the main channel, in "Kilgubbin" at the forks of the north branch, and 
in the sections west of Wells Street, south of Washington Street to the 

river. 

TABLE I 

POPULATION OF CHICAGO BY WARDS, 1837-45 







DA 


TE 






i837 


1840 


1843 


1845 


South Side, first ward, east of Clark 
South Side, second ward, west of Clark. . . 
West Side, third ward, south of Randolph 
West Side, fourth ward, north of Ran- 
dolph . . 


i, 02 1 
1,309 
iQS 

2*8 


I>197 

1,467 

251 
170 


1,986 
2,231 
509 

A.1A 


3,238 
3,460 
1,009 

820 


North Side, fifth ward, west of Clark . . . 


32O 


4.36 


600 


I O^2 


North Side, sixth ward, east of Clark. . . . 


918 


1,323 


1,840 


2,499 


Total 


A I7o* 


A gC7 


7 cgn 


12 088 













* Includes 169 transients not enumerated in ward totals. 

At the beginning of 1848 Chicago was still a country town with cows 
browsing in pastures a mile from the city hall, and occasionally roaming 
through the main business street. Hogs recently had run wild in the 
center of town, and wolves had been seen at Wabash and Adams 
streets. The roads had not been improved in any way, as the following 
account of "Long John" Wentworth shows: 

I said we had no roads in 1848. The streets were simply thrown up as country 
roads. In the spring, for weeks portions of them would be impassable. I have at 
different times seen empty wagons and drays stuck on Lake and Water Streets on 

every block between Wabash Avenue and the river The clerks having little 

or no business put up signs on mud holes, "no bottom here," "the shortest road 
to China" or stuck up a figure in effigy with a sign "on his way to the lower 
regions." 23 

21 Chicago Tribune, July 10, 1887. 

22 Charles Cleaver gives a similar account in Early Chicago Reminiscences (Chicago : 
Fergus Printing Co., 1882), p. 28. 



52 ONE HUNDRED YEARS OF LAND VALUES 

Such was Chicago a town without pavements, sidewalks, sewers, 
gas lights, street cars, or railroads on the eve of the influx of a new 
series of transportation agencies that were to transform it entirely. 

A slow rise in land values. In 1844 began a slow increase in Chicago 
land values, which was at first confined to the streets close to the main 
business center. A lot on Randolph Street near State sold for $10 a 
front foot in 1842, for $15 a foot in 1844, $50 a foot in 1846, and $80 a 
foot in i848. 23 Wabash near Van Buren had risen to $18 a foot by 
i848, 34 and Clinton Street near Washington Street on the West Side 
from $1.50 to $11 a foot from 1843 to 1847. 2S Michigan Avenue near 
South Water (Lot 17, Block 17, Fort Dearborn Addition) advanced in 
value from $13 a foot in 1840 to $50 a foot in i848. 26 State Street near 
Monroe sold for only $30 a foot in 1848, although this was five or six 
times its value in 1843 , 27 I n ^48 vacant lots 25 by 150 feet in the busi- 
ness center of Chicago could be rented for $250 a year, and the best 
four-story brick houses (25 by 100 feet) for $800 a year. 28 

The rise in land values in the outlying acres was in some cases barely 
perceptible in this period. Land near State and Roosevelt Road had 
reached only $250 an acre by I845, 29 an d Sixty-third and Stony Island 
sold for $7.00 an acre in 1847. 3 Roosevelt and Western sold for $50 an 
acre at the same time (1847) , 31 an d Sixty-third and Cottage Grove for 
$4.50 an acre. 32 Irving Park and Narragansett brought only $7.00 an 
acre in i849. 33 At Ashland and Lawrence land was only $3.25 an acre in 
i847, 34 at Lawrence and the Lake $2.00 an acre in i847, 3S an d a t Sixty- 
third and Halsted streets only $7.00 an acre the same year. 36 Such ex- 
amples suffice to show that a very low level of values obtained for lands 
more than a mile from State and Madison prior to the coming of the 
new transportation factors from 1848 to 1854. 

*3 Shortall and Hoard's Abstracts (in the files of the Chicago Title and Trust Co.), Vol. 82, 
pp. 858-67. 

*4 Ibid., Vol. 60, p. 848. * 6 Ibid., Vol. 39, pp. 986-88. 

Ibid., Vol. 44, pp. 664-67. v Ibid., Vol. 41, p. 962. 

28 M. L. Putney, Real Estate Values and Historical Notes of Chicago (1900), p. 121. 

29 Shortall and Hoard's Abstracts, Vol. 70, p. 459. 
Ibid., Vol. 72, p. 437- 

31 Chicago Title and Trust Co. Abstracts, Vol. 1737, p. 704. 

** Ibid., Vol. 1154, p. 353. 

33 Ibid., Vol. 1588, p. 96. 35 ibid., Vol. 2061, p. 61. 

" Ibid., Vol. 3795, p. 495. & Ibid., Vol. 657, p. 666. 



THE RAILROAD ERA 53 

B. THE PERIOD FROM 1848 TO 1857; THE NEW AGENCIES OF 
TRANSPORTATION AND COMMUNICATION 

The canal. The first of the new transportation agencies was the 
long-awaited canal, which was opened for traffic in April, i848. 37 Its al- 
most immediate effect was to turn to Chicago the trade of the Illinois 
River Valley, which had been tributary to St. Louis. 38 Farmers along 
the route of the canal now shipped their wheat to Chicago, the canal 
brought Illinois coal to Chicago that enabled the iron industries to be- 
come established, while the canal boats carried return cargoes of lumber 
that increased from 15,000,000 feet in 1848 to 39,000,000 feet in 1850 
and 81,000,000 feet in 1855, thus stimulating the lake-borne lumber 
trade. 39 St. Louis merchants found that the all-water route by way of 
the Mississippi-Illinois rivers, the Illinois-Michigan Canal, the Great 
Lakes from Chicago to Buffalo, the Erie Canal, and the Hudson River 
was cheaper and quicker than the route by way of the Ohio River, the 
total freight on a barrel of flour by the Chicago route to New York 
being $1.48 and the time in transit from twelve to twenty days as 
compared with thirty to forty days on the Ohio River route. 40 A canal 
steamboat with room for thirty-five cabin passengers and capable of a 
speed of six miles an hour began to operate on the canal in i85o, 41 and 
this service was extensively used by emigrants going westward through 
Chicago to reach the steamers on the Illinois and Mississippi rivers. 

The telegraph. On January 15, 1848, Speed and Cornell's telegraph 
line was completed from Chicago to Milwaukee. Shortly afterward 
O'Reilly's line was opened to St. Louis, thereby giving Chicago tele- 
graphic communication with New York and New Orleans also. In 1850 
Snow's line from Laporte to Chicago gave wire connections with De- 
troit, Toledo, and all of Canada. By 1851 the corner of Clark and 
Lake streets was the center of four intersecting telegraph lines which 
put wheat-buyers and wheat-sellers in quick touch with world-markets 
and facilitated the rise of Chicago as a center of financial control. 

The plank roads. The southwestern plank road was started on Og- 
den Avenue in 1848 and was completed to Lyons by March, 1849; tne 

37 Goodspeed and Healy, op. cit., I, 187. 

38 J. W. Putnam, op. cit., p. 102. 

39 Ibid., p. 102; Hunt's Merchants' Magazine, XXXIX (1858), 428. 

40 History of the Board of Trade, I, 148. 

41 Goodspeed and Healy, op. cit., I, 209. 



54 ONE HUNDRED YEARS OF LAND VALUES 

northwestern plank road on what is now Milwaukee Avenue was 
started in 1848 and was finished to Desplaines in 1849; and plank roads 
in the city on Madison and State streets, started in 1848, were heavily 
used by the wagon caravans bringing wheat to the city before the ad- 
vent of the railroads. The tolls of the two former roads yielded 10-15 
per cent dividends to the private companies that constructed them. 
Within the city, omnibus lines were quick to take advantage of the 
plank roads on State and Madison streets, and Peck's line, which oper- 
ated from the Lake Street bridge to State Street and down State to 
Twelfth Street in 1852, and the line on Madison Street from State to 
Ashland Avenue were the forerunners of horse-car lines which later 
followed these routes. 

The railroads. The chief ultimate importance of the canal, the lake 
traffic, and the plank roads was that they gave Chicago sufficient ad- 
vantages to attract the railroads, whose importance in making Chicago 
a great wholesale and manufacturing center and in causing a tremen- 
dous rise in its land values far transcended any other single factor. 42 
The railroads finally became an interlocking network of lines covering 
the entire United States, but in the beginning they were conceived of as 
merely connecting links between waterways, and hence a city with a 
large existing canal and lake commerce provided a magnet that was 
sure to draw them to it. Chicago did not play a prominent role, how- 
ever, in the calculations of the first railway promoters, probably be- 
cause its lake and canal commerce had not been sufficiently developed. 
Thus the first plan for the Illinois Central in 1836 and 1837 was for a 
route between Galena on the Mississippi River, LaSalle, the terminus 
of the Illinois-Michigan Canal, and Cairo on the Ohio River; the orig- 
inal line of the Rock Island Railroad was to be from the Illinois-Michi- 
gan Canal to the Mississippi River at Rock Island; the Michigan Cen- 
tral as first projected was to run from Detroit to St. Joseph on Lake 
Michigan; and the Galena and Chicago Union was to connect Lake 
Michigan with the lead mines of Galena. Each state was planning its 
own railroad system with little regard for its junction with the railroad 
systems of other states, and hundreds of private companies were plan- 
ning small lines between neighboring towns. In this welter of projects 

< 3 "The city of Chicago has built herself up, doubled her trade, trebled the value of her 
real estate and rendered it saleable by a single act of policy that of making herself a rail- 
road center" (Detroit Advertiser, June, 1853; quoted in Goodspeed and Healy, op. cit., I, 
243-44)- 



THE RAILROAD ERA 55 

and of conflicting local systems, there was at first no conception of a 
great western railroad system with its center at Chicago, and many 
localities would have combined to fight such a project had it been 
definitely formulated. The influence of astute eastern capitalists, how- 
ever, who foresaw the possibilities of Chicago in 1851, compelled the 
Rock Island to make Chicago its terminus; the branch line of the Illi- 
nois Central to Chicago soon became the most important part of its sys- 
tem, and other local lines which started from Chicago, like the Galena, 
in the end became national systems. What had not even been dreamed 
of before 1848 had become an accomplished fact six years later. Chica- 
go, without a single mile of railroad in January, 1848, was the railroad 
center of the West in 1854. 

The first railroad at Chicago was the Galena and Chicago Union, 
which, starting in 1848 with a secondhand locomotive and six old 
freight cars, began to operate on its ten-mile line to the Desplaines 
River. Originally it was compelled to stop at the city limits at Halsted 
and Kinzie, on account of the fears of the retail merchants, who saw in 
it a menace to the wagon trade. Financed by subscriptions from the 
"butter-and-egg money" of farmers' wives as well as by eastern cap- 
italists, it pushed westward to Elgin by 1850 and to Freeport by August 
of 1853, from whence it proceeded to Galena and Dubuque, Iowa, over 
the recently completed line of the Illinois Central. Into this main line 
other streams of traffic poured at Geneva Junction : first, the trade of the 
Fox River Valley coming from the north over the Fox Valley Railroad; 
second, that of a branch of the Galena running directly west to Fulton, 
Iowa, on the Mississippi River; and, third, the traffic of the Chicago, 
Burlington and Quincy Railroad, which was itself a consolidation of 
several lines built from Aurora to Burlington, Iowa, and which entered 
Chicago from Geneva over the tracks of the Galena. A success from the 
very start, the wheat receipts of the Galena Railroad increased to 
505,000 bushels in 1852 and 4,500,000 bushels in 1855, and in the same 
years it shipped out respectively 47,500,000 and 111,000,000 board feet 
of lumber. 43 Of great importance to the growth of the West Side be- 
cause of the volume of its traffic, this railroad not only extended its 
main line to Kinzie and the Chicago River inside the city limits, but in 

"The success of the Galena and Chicago Union Railroad is the parent of all subse- 
quent railroad movements in this state. Had that enterprise failed, Chicago would not now 
count half of its present population" (Chicago Magazine, 1857, cited in "Fergus Historical 
Series," No. 5, Part II, p. 16). 



56 ONE HUNDRED YEARS OF LAND VALUES 

order to secure a still better access to the lake commerce it bought land 
along the north bank of the main channel of the Chicago River as far 
east as State Street in 1851, and built a passenger depot at Wells and 
Kinzie streets at the same time. 

In the meantime, the Illinois Central Railroad, conceived as part of 
the state's great internal improvement program of 1837, na d finally in 
1850 secured a land grant of 2,500,000 acres from Congress. In 1851 it 
had become incorporated and with the aid of large loans from abroad 
had completed by 1852 a line from Mattoon, Illinois, to Kensington 
(One Hundred and Fifteenth Street). During the early part of 1852 
this railroad had been constructing a line along the lake front to Roose- 
velt Road. From there it was enabled in 1853 by an ordinance of the 
city council to proceed on piles driven in the shallow waters of the lake 
to its terminal at Lake Street, east of Michigan Avenue. By 1855 the 
entire system of 700 miles in Illinois had been completed at a cost of 
$40,000,000, and it was then the largest railroad system in the world. 
Its effect on the development of the southern suburban area of Chicago 
was almost immediate, for in 1856 it began to operate suburban trains 
to Hyde Park and by 1857 it was running six trains a day in this service. 
The Rock Island, with its depot at Sherman and Jackson streets, 
started from Chicago in 1852 and was completed to Joliet by October 
of the same year. By 1854 it was completed to Rock Island and the 
next year crossed the Mississippi River over a new bridge into Iowa. 
Despite all the efforts of the steamboat interests and the merchants of 
St. Louis and New Orleans to close the bridge as a menace to naviga- 
tion, the railroad successfully diverted most of the Iowa trade along its 
route from St. Louis to Chicago. Its immediate local effect was also 
important, not merely on the land near its depot, but also on the land 
near Roosevelt Road where it established carshops and a grain elevator 
and upon the suburban land all along its route from Roosevelt Road to 
Englewood and Washington Heights. 

The eastern railroads, the Michigan Central and the Michigan 
Southern, the former entering the city over the tracks of the Illinois 
Central and the latter over those of the Rock Island, both reached the 
city from the East in 1852. These new lines proceeded to pour into the 
city a great flood of emigrants, thereby contributing greatly to increase 
the permanent and transient population of Chicago in the next few 
years. 




FIG. 9. Railroads entering Chicago in 1854. Solid line indicates railroad lines actu- 
ally built in 1854. Dotted line indicates projected railroad lines. 



58 ONE HUNDRED YEARS OF LAND VALUES 

In addition to the railroads already enumerated, which were then 
the most important, there were, first, the Chicago and Milwaukee 
Railroad of 81 miles, built along the north shore to Milwaukee in 1854; 
second, the Chicago, St. Paul and Fond du Lac, which was constructed 
through Jefferson and Norwood Park northwest from the city in 1854, 
started suburban villages there, and was later to become the basis of the 
Chicago and Northwestern Road; third, the Chicago and Alton, which 
had reached Joliet from Alton and Springfield by 1854, but which did 
not enter Chicago by its route along the Illinois and Michigan Canal 
until 1857; and, fourth, the Pittsburgh, Fort Wayne, and Chicago, 
which formed a direct line between Chicago and Pittsburgh by 1859. 
These four latter railroads entered a union depot on Canal Street near 
Madison which was finished in 1860. 

Thus, after a period of intense railroad activity, particularly from 
1852 to i854, 44 Chicago by 1856 was the focus of ten trunk lines with 
2,933 miles of track leading to all parts of the country and it had fifty- 
eight passenger and thirty-eight freight trains arriving and departing 
daily. The total earnings of the lines entering Chicago had increased 
from $174,000 in 1851 to $10,652,000 in 1855 and $18,590,520 in i857. 4S 
One hundred and twenty trains entered the city daily in 1857. 

Grain and lumber trade. The new railroads and the canal co-oper- 
ated with the lake vessels to the benefit of all three agencies. The two 
former brought in the wheat for the lake boats to carry eastward, and 
these ships in turn brought back lumber for the railroads and the canal 
to distribute into the interior western sections that had already ex- 
hausted their easily accessible local timber supplies. Chicago lumber 
receipts, which had been estimated at 12,000,000 board feet in 1843 an d 
which were 32,000,000 feet in 1847, increased rapidly to 60,000,000 
board feet in 1848, 100,000,000 board feet in 1850, 200,000,000 board 
feet in 1853, and 457,000,000 board feet in 1856, while total shipments 
of grain from Chicago rose from less than 2,000,000 bushels in 1850 to 
13,000,000 bushels in 1854 and nearly 22,000,000 bushels in 1856. 46 
Meanwhile, the arrivals and departures of lake vessels had increased 
from 459,910 tons in 1844 to 1,098,644 tons in 1854 and 1,608,645 tons 
in 1856. By 1854 Chicago, by virtue of its location and transportation 

* 1,621 miles in 1854 (Goodspeed and Healy, op. cit., I, 253). 

Hunt's Merchants' Magazine, XXXVIII (1858), 756; ibid., XXXIX (1858), 424. 

* 6 Chamberlin, Chicago and Its Suburbs (Chicago, 1874), pp. 282, 285. 



THE RAILROAD ERA 59 

advantages, had become the leading primary grain and lumber market 
of the world. 

Infant industries. The teamwork between lake commerce, canal, 
and railroads further developed a great wholesale trade in groceries, 
shoes, clothing and hardware, and generated a new manufacturing in- 
dustry. The eastern railroads brought in a large supply of skilled and 
unskilled labor; the western railroads widened the market for the 
wagons and agricultural implements that were already being produced, 
and they themselves created a new demand for car-repair and car- 
building shops, boiler works, iron-rail mills, and bridge-building plants. 
The lake vessels brought iron from as far away as Scotland, and lumber 
for wagons, agricultural implements, and railroad cars. The canal 
shipped in Illinois coal for the budding iron industry. The close com- 
munity between the lake, canal, and railroads, with the Chicago River 
and its branches serving as a connecting link between them all, was re- 
vealed by the tenacity with which the railroad lines clung to the Chica- 
go River where lake and canal commerce met, and by the tendency of 
the first manufacturing plants to locate near the river and the railroad 
terminals. Manufacturing was in its infancy, but the foundation of the 
later enormous increase in volume was being laid. The growth in the 
number of workers employed in manufacturing from 2,081 in i85o 47 to 
10,573 i* 1 i856, 48 and in the value of manufactured products from 
$2,562,583^ to $i5,5i3,o63, 49 is significant not for the absolute amounts, 
but for its indication of future growth. The pattern was being formed 
and the connections being established in this period for the industrial 
factor that was to be the overshadowing influence in the next few 
decades. 

The new banks. The new organization of transportation, wholesale 
trade, and manufacturing urgently called for a new financial system. 
For nearly a decade Illinois had had no regular banks, and the need for 
currency had been supplied by George Smith's admirable money, 
which was always promptly redeemed, other private issues, and the 
notes of distant banks in other states. In 1851 a new banking law was 
passed authorizing the organization of banks in Illinois which were al- 
lowed to issue their notes against bonds deposited with the state audi- 

47 U.S. Census (1950) figures for all of Cook County. 

48 Local estimate of Chicago Daily Democrat, January i, 1857. 
4 ' Ibid. 



60 ONE HUNDRED YEARS OF LAND VALUES 

tor. A feature of this law, which later became of great significance, was 
the requirement allowing notes to be issued to the full amount of the 
bonds only in the case of those obligations that regularly paid 6 per cent 
interest per annum. This induced the banks to invest largely in the 
bonds of the southern states, whose 6 per cent bonds were not above 
par. The effect of this new law, under which nine banks were organized 
in Chicago by January, 1854, was greatly to increase the ease of bor- 
rowing money and, beginning in 1852, this was a pronounced factor in 
real estate speculation. By 1856 the circulation of all the state banks in 
Illinois had risen to over twelve million dollars, and while practically no 
specie reserve was maintained to redeem the notes, on forced liquida- 
tion the bonds securing the notes had in every instance before 1860 ex- 
cept one been sold for enough to pay the notes in full. A further impor- 
tant step in market organization was the formation of the Board of 
Trade in 1848, which was later to have a decisive role in determining 
the location of the financial center. At this time the financial center 
was on Clark Street near Lake, where the new banks, the old financial 
houses, and insurance companies were mainly located, and where the 
telegraph lines had their center. 

The new wholesale trade. The opening of the Illinois and Michigan 
Canal caused a revolutionary change in the character of Chicago trade 
with the farmers. Before that event it had been mainly retail. There- 
after it became chiefly wholesale. The manner in which this transfor- 
mation occurred is thus described: 

When the canal was opened all of a sudden, these farmer wagons disappeared 
and our merchants were greatly astonished and nearly panic-stricken at the wonder- 
ful change. The farmers could get for their farm products at the towns on the canal 
from 30 to 80 miles from Chicago within a cent or two as much per bushel [for their 
wheat] as in Chicago. 

Enterprising grain and provision merchants had pushed out to take the farm 
products at canal towns, and the merchants sent their goods out to meet the de- 
mands of the farmer retail trade. Thus the wholesale trade of the city was in- 
augurated. The rapid increase in the population of Chicago and the advantages of 
the wholesale trade soon re-established the business and confidence of the mer- 
chants.* 

The physical growth of Chicago, 1848-57. After thus briefly describ- 
ing the forces of transportation that converged upon Chicago and made 
it in time one of the world's greatest crossroads of commerce, it is neces- 

s J. W. Waughop in Chicago Tribune, September 28, 1884. 



THE RAILROAD ERA 61 

sary before discussing the decisive influence of these forces upon the 
sensational rise of Chicago land values to describe the internal growth 
of Chicago during these eventful formative years when its future char- 
acter was being decided. 

While the population of Chicago almost doubled from 1847 to 1848, 
increasing from 10,859 to 20,023, the young city contained, in addition, 
a large transient population which was constantly passing through it 
and causing an expansion of its hotels, saloons, and retail stores far be- 
yond the needs of its permanent residents. To the farmers in their 
prairie schooners, the sailors from the lake vessels, and the emigrants on 
their way to western farms was now added the throng of "forty-niners" 
bound for the gold fields of California. The time from New York to 
Chicago had been reduced from the thirty days of 1836 to seven days in 
1849, as a result of the completion of a railroad line from the East to 
New Buffalo, Michigan, on the opposite side of the lake. Travelers took 
a steamer at New Buffalo for Chicago, and at Chicago many of them 
took packet boats on the canal for LaSalle, where they transferred to 
Mississippi River steamboats. The streets of Chicago were thus places 
of restless activity even in 1849 before the main development of the 
railroads. The forces of the new industrialism, then novel and strange, 
thrilled the local newspaper writers, and they were fascinated by the 
power of steam and the flow of goods and people that had been rapidly 
set in motion in this quiet country town. 

Our streets present an animated picture. Thronged with laden wagons, filled 
with busy people, vocal with the rattling of wheels, the rush of steam, the clank of 
machinery and many voices, goods gaily flaunting from awning posts and store 
doors, docks piled with boxes, bales and bundles of merchandise, warehouses like 
so many heart ventricles receiving the grain on one side, and with a single pulsation, 
pouring it out on the other into waiting vessels and steamers to be borne away on 
the general circulation, lumber yards heaped with the products of the forest, fur- 
naces and machine shops sending out the exponents of industry and skill, here a 
drove of horses, there a herd of cattle, those for the Chicago Tattersalls, these for 
the shambles and the packer the multitude of strangers whose arrival every pack- 
et bugle and locomotive whistle and steamer's bell heralds, all these and more are 
now pictured upon every observer's eye and swell the diapason of busy life to every 
listening ear. How different from the listlessness and languor which pervaded the 
city but two months ago. 51 

Even this tempo was speeded up in 1852 when direct rail communica- 
tion was opened between Chicago and New York and the time required 

s 1 Chicago Daily Journal, October 18, 1849. 



62 ONE HUNDRED YEARS OF LAND VALUES 

for the trip was reduced from seven days to thirty-six hours. The Irish 
fleeing from the country stricken by famine in 1845 an d 1846 and the 
Germans emigrating from their homeland because of agricultural de- 
pression and the failure of the liberal movement in 1848 could come 
directly from New York, the main port of entry, into the heart of 
America. From 1852 to 1853 the population of Chicago increased from 
38,754 to 60,666 and half the population in the latter year was foreign 
born. Most of this increased population was poured into the city by 
the railroads. Four trains on the Michigan Central Railroad brought in 
two thousand passengers from the East in one day in 1854. In the five 
years ending February, 1857, all of the railroads entering or leaving 
Chicago carried three million passengers. Chicago, however, according 
to one observer, still presented an unprepossessing appearance even in 
1853- 

At that time [October 6, 1853] Chicago was called a city, it is true, but it was a 
rude, cheaply built and dirty Western town. On the South Side there was beyond 
Twelfth Street nothing to speak of but one large frame house known as the Clarke 
House, and the depot of the Michigan Southern Railroad on Clark Street. West 
of this street there was a broad space of vacant lands on the north and west sides, 
though there were scattered wooden residences as far west as Bull's Head Tavern 
in the neighborhood of Union Park. In the center of the city there were some cheap 
wooden buildings, some on South Water and Lake Streets. A few brick stores stood 
on Clark and Dearborn Streets north of Randolph. South of Randolph on the 
same streets, wooden dwellings, houses with now and then an unpretentious church 
edifice extended southward to i2th Street. The streets of Chicago were at that 
time execrable, being unpaved, but in the older parts of the city covered with 
planks, beneath which lay an untold depth of black mud, jets of which were thrown 
up as wagons passed. 52 

As a result of the heavy volume of European immigrants and home- 
seekers from the East coming West on the railroads to Chicago, the city 
grew rapidly in population to 80,000 in 1855, a seven-fold increase in 
the decade since i845. 53 The hotels were overcrowded, and notwith- 
standing the rapid rate of building it was said in 1854 that there was 
not a house to let in the city. The increased tempo of activity in 1854 is 
thus described: 

Never in the history of Chicago have the streets of our city given so clear evi- 
dence of intense activity as for the past few weeks. Carriages, drays, vehicles of all 

s 3 Address of Judge John Alexander Jameson, "In Memoriam," Annals of the American 
Academy of Political Social Science (1890). 
53 Chamberlin, op. cit., p. 279. 



THE RAILROAD ERA 63 

descriptions fill the streets, the sidewalks are literally crowded with people in a 
hurry, rushing in all directions. The hotels are crowded to overflowing and those 
who arrive by the evening trains are fortunate if they find a place to lie down on the 
parlor floor until morning^ 

This flow of traffic reached a maximum at the Clark Street bridge, 
where in one day in 1854 from 6 : oo A.M to 7 : oo P.M. 24,000 persons and 
6,000 teams crossed in both directions, and where from November 13 to 
15, 1855, an average of 27,750 persons and 4,909 teams crossed it daily. 
Next in importance was the Randolph Street bridge from the West Side 
with an average daily traffic count of 12,660 persons and 2,845 teams in 
1855. The Lake, Wells, Madison, and Kinzie Street bridges carried re- 
spectively 9,426, 8,836, 7,946, and 6,546 persons daily and 6,587, 1,790, 
2,010, and 263 teams daily at the same time. Thus there was a total of 
73,164 persons and 18,404 teams daily on all bridges. 55 The incoming 
passengers on the Michigan Central arrived at the depot of the Illinois 
Central at Lake Street east of Michigan Avenue; those from the East 
coming on the Michigan Southern poured in at the station at Van 
Buren and Sherman streets, while western-bound emigrants left at 
these depots or at the Wells and Kinzie Street depot of the Galena or 
the union depot on the West Side. 

New buildings and public improvements. Under the stimulus of in- 
creased demand for housing and rising rents, the number of buildings in 
the city increased from 1,364.111 1842 to 5, 798 in 1851 and 9,212 in i853. s6 
In 1854 new buildings and public improvements to a value of $2,438,910 
were added, and in the next three years the amounts were respectively 
$3>735>> $5>7 8 > 62 4> and $6,423,518, making a total outlay of 
$18,305,000 for new buildings and public improvements for the four 
years 1854-57 inclusive. 57 These buildings included not merely thou- 
sands of small frame cottages but also four- and five-story brick build- 
ings on Lake and Randolph streets. 58 

54 Daily Democratic Press, November, 1854. 

55 Ibid., December 22, 1855. In 1871, 200,000 a day crossed 27 bridges. 

56 Goodspeed and Healy, op. cit., I, 223, 250. Then in 1851 the number of buildings 
1,506 on West Side, 2,742 on South Side, and 1,550 on North Side. There were 7,627 dwell- 
ings in 1853. 

57 Moses and Kirkland, op. cit., I, 124. 

s g "A large proportion of the buildings are of brick. Iron has become an article almost 
indispensable to the builder. A larger quantity of stone has been used during the past than 
during former years. In finish and design, especially of stores, a greater degree of attention 
has been paid to taste and style" (Democrat, January 5, 6, 1852). 



6 4 ONE HUNDRED YEARS OF LAND VALUES 

The city was also undergoing a great transformation in regard to its 
public improvements with the introduction of plank roads, sidewalks, 
gas lights, sewers, and new bridges. Lake Street was planked as early 
as 1844; in 1849 nearly 3 miles of planking were laid, and in 1850 6.69 
miles of plank roads were constructed in the city, of which 12,667 ^ ee t 
were on State Street, 7,481 feet on West Madison Street, 4,921 feet on 
Market Street, 4,329 feet on North Clark Street, and a total of 2,930 
feet on South Clark, LaSalle, Wells, East Madison, and West Randolph 
streets. 59 These plank roads contributed greatly to the rise of land 
values on State, Madison, and North Clark streets, since, as they were 
planked for considerable distances, they attracted the omnibus lines. 
By 1856 there were eighteen of these lines making 408 trips daily. 60 
Gas lights were first introduced in September, 1850. By 1855 there 
were 2,000 consumers and by 1856 there were 456 public lamps. 61 The 
first sewers were constructed in 1851 when 2,987 feet were laid down, 
and by 1856 there were 6 miles of sewers in Chicago, those east of 
State emptying into Lake Michigan and those west of it into the river. 62 
By 1854, 159 miles of plank sidewalks had been constructed. 63 A new 
water company was organized in 1851 ; by 1853 it had completed a crib 
600 feet from the shore and by 1857 it was supplying 7,053 buildings 
with water. 64 Twenty-seven miles of plank road had been laid by 1854, 
but these soon fell into bad repair, and new pavements of macadam, 
cobblestones, and finally of wooden blocks were tried, the latter type 
being used on Wells and Washington streets in 1856 and i857. 6s Final- 
ly, after widening and deepening the main channel of the river in 1855 
and 1856, the city, to provide a better grade for drainage, raised the 
level of the downtown area from 4 to 6 feet during the years from 1856 
to i86o. 66 A new iron bridge was constructed over the main channel at 
Rush Street to connect the Illinois Central and Galena depots in 1856, 
and new bridges were built in 1857 over the south branch at Polk and 
over the north branch at Erie and Indiana (or Grand) streets. 67 

59 Chicago Daily Journal, January 4, 1851; Goodspeed and Healy, op. cit., I, 219. 

60 Moses and Kirkland, op. cit., I, 127. 

61 Ibid., p. 124. 6a Andreas, op. cit., I, 191. 
63 Moses and Kirkland, op. cit., I, 126. 

^Ibid., p. 125. <xlbid., p. 126. 

66 Ibid., p. 125. The level was raised 10-15 f ee t altogether, but at this time the level 
was raised from 4 to 6 feet. 

6 ? Andreas, op. cit., II, 60; ibid., I, 202. 



THE RAILROAD ERA 65 

Chicago's expansion. During this period from 1848 to 1857, Chicago 
was building up solidly with four- and five-story brick buildings at its 
center on Lake Street, and building thousands of frame cottages on the 
near South, North, and West sides. Lake Street, the main retail street, 
had by 1856 not a vacant lot from the river on the west to the depot 
east of Michigan Avenue. South Water Street was rejuvenated from a 
street of tumble-down shanties into the leading wholesale street. The 
expansion of business down State, Clark, and Dearborn streets had 
reached and passed Washington Street, whose churches were beginning 
to move over to Wabash Avenue. Fashionable homes were being 
erected on Michigan and Wabash avenues south of Van Buren and 
Congress streets by 1854. Hotels were springing up around the railroad 
depots near Michigan and Lake streets, near Van Buren and Sherman 
and on North Clark streets. Wagon factories were located along Ran- 
dolph Street just east and west of the south branch, and on Franklin 
and Market streets; iron foundries and planing mills found sites on 
Canal and Clinton streets near Randolph and Washington streets ; and 
along the north bank of the river along Kinzie Street were several large 
industries, including the McCormick reaper works near the mouth of 
the river. Large grain elevators were along the river near the railway 
terminals as far south as Roosevelt Road; there were a great many 
lumber yards on the west bank of the south branch stretching as far 
south as Twenty-second Street. The largest stock yard in 1856 was at 
Bull's Head at Madison and Ashland Avenue, but there were other im- 
portant yards at Eighteenth Street and the south branch, and at Cot- 
tage Grove and Twenty-ninth streets. The car-repair shops at the 
Galena Railroad at Kinzie and Milwaukee, of the Illinois Central south 
of Roosevelt Road near Michigan Avenue, of the Rock Island near 
Roosevelt Road and State Street, and the shops of the American Car 
Company at Twenty-sixth Street and the lake furnished employment 
for many men and gave rise to workingmen's homes and boarding- 
houses in their vicinity. To the slum areas along the river, the Kilgub- 
bin, with a notorious population of two thousand in 1858, to the 
"Sands" north of the river near Lake Michigan, which was raided and 
burned down by Mayor Wentworth in 1857, and the sailors' resorts on 
Wells and the streets west of Wells south of Washington were now 
added such new patches as the forty or fifty acres of shanties on the 
West Side near Halsted and Twenty-second Street on the south branch; 



66 ONE HUNDRED YEARS OF LAND VALUES 

twenty acres of shacks near Halsted, Desplaines, and Harrison; the 
Milwaukee and Union Avenue section; the slums on Clark and State 
near Roosevelt Road and on North Rucker and Kinzie, 68 each of which 
settlements possessed a peculiar jargon of its own. The floating popula- 
tion brought in by the railroads contributed to the growth of these 
areas, which were often located near railroad shops and yards. 

Of all the sections of the city, the West Side grew fastest in this 
period from 1848 to i85y. 69 Although in 1851 out of 5,798 buildings in 
Chicago only 42 were west of Carpenter's Addition (i.e., over one and a 
half miles west of State and Madison streets) and only 15 were west of 
Duncan's Addition (i.e., west of Roosevelt Road and Halsted), 70 by 
December, 1853, the population of the west division was 14,679 and by 
August, 1856, it had doubled in numbers with a total of 28,250. In the 
meantime, the population of the North Side increased from 17,859 to 
25,524 and that of the South Side from 26,592 to 30,339. 71 The plank 
roads, the railroads with their terminals and carshops, the lumber 
yards, and thirty or forty small manufacturing plants on or near the 
south branch of the river contributed to this growth. 

By 1857 Chicago had grown solidly on the west as far as half a mile 
west of Halsted, as far south as Roosevelt Road, and as far north as 
Chicago Avenue. There were also patches of growth beyond in all 
directions. On the West Side a prong of growth extended along Madi- 
son to Ashland Avenue. Carville at Twenty-sixth Street and Cottage 
Grove Avenue, Cleaverville at Thirty-ninth Street and the lake, and 
Holstein at Western and Fullerton avenues were the satellite industrial 
towns beyond the main settled area of this period. Other detached set- 
tlements had grown up at Clark and Division streets, Division and 
Clybourn streets, and at Irving Park and Clark streets. Beyond all of 
these were the embryonic suburban towns just starting along the rail- 
roads at Hyde Park, Fifty- third, and the Illinois Central; Englewood, 
Sixty-third and the Rock Island; Grand Crossing; and a few incipient 
traces to the north and west. The suburban movement had barely 
started in this period. 73 Of the 112,000 people living within four miles 

68 Goodspeed and Healy, op. cit., I, 190-91. 

< Ibid., p. 221. TIbid., p. 223. 

** Moses and Kirkland, op. cit., II, 613. 

v The first settler came to Kenwood in 1856. "In the fall of 1856 there were not more 
than half a dozen houses in Hyde Park" (Andreas, op. cit., p. 530). There were only three 
or four shanties at Kensington in 1854 and only a few settlers in Englewood before 1867. 



THE RAILROAD ERA 67 

of State and Madison in 1860, 79,000, or over 70 per cent, lived within 
the first two miles. 73 

The rise in land values, 1848-57. The completion of the canal in 
1848 enabled the canal trustees to offer for sale large tracts of canal 
lands within two or three miles of the main business district of Chicago 
in ten- and twenty-acre blocks. Then the new boom began to get under 
way. Increasing business and rising rents in the downtown area slowly 
raised values there, Lake Street west of LaSalle selling for $225 a foot 
in 1848, and Madison near State at $120 a foot in 1849. The corner of 
Clark and Lake sold for $400 a foot in October, i852. 74 The rise in 
values from 1852 to 1854 was spectacular, and is but faintly indicated 
by the increase in the assessed value of real estate from $5,685,965 in 
1850 to $8,189,069 in 1852, $13,130,177 in 1853, and $21,637,500 in 
1855, large as that was. 75 The ease of borrowing money from the new 
state banks and sales on easy instalments encouraged real estate specu- 
lation in 1852, and the great demand for land for actual use for railroad 
yards and terminals, for lumber yards, elevator and manufacturing 
sites, and for hotels, stores, and homes for the expanding population 
gave a sudden increase to the value of close-in vacant land, while rising 
rents and taller buildings created a higher value for that already in use. 
While Lake Street attained an average value of $1,000 a front foot by 
i856, 76 the best wholesale streets, such as South Water Street, reached 
$500 a foot, the best residence sites on Michigan and Wabash near Van 
Buren $300," and with corners as high as $400 a foot; 78 lots along the 
river as far south as Eighteenth and as far north as North reached $100 
a foot, and other land as far south as Roosevelt Road and as far north 
as Chicago and as far west as Halsted passed the $ioo-a-foot level. 

By 1856 State and Clark streets near Monroe had sold for $250 a 
foot, 79 Jackson and Sherman $100 a foot, Clark Street north of Chicago 
$125 a foot, LaSalle near Oak $200 a foot, Lake near Carpenter $100 a 

73 Report of Chicago Traction and Subway Commission, 1916, p. 73. 

74 Goodspeed and Healy, op. cit. t I, 239. 

75 Chamberlin, op. cit., p. 201. 

T 6 Chicago Democratic Press, February 5, 1857. 

77 Ibid., November 12, 1855. 

7 8 Sale of corner of Michigan and Congress for $400 a front foot (ibid., April 17, 1856). 

79 The sale of the southeast corner of State and Van Buren, 160 feet on State by no feet 
on Van Buren, for $32,000 was reported in the Daily Democratic Press on December 22, 
1855- 



MAP OF CHICAGO 

-SHOWING - 



ORIGINAL SUBDIVISIONS 
1844 TO 1862 



LEGEND FOR DATA 

AREAS SUBDIVIDED BEFORE 1844 
AREAS SUBDIVIDED FROM 1844 TO 1847 



AREAS SUBDIVIDED FROM 1856 TO I860 
THERE WERE NO SUBDIVISIONS IN 1861 AND 1862 




V. 

iillnhii 



FIG. 10 



THE RAILROAD ERA 69 

foot, and Lake facing Union Park $100 a foot. Land on Michigan 
Avenue between Monroe and Adams sold for $325 a foot in 1855. 8o The 
corner of Lake and Clark reached $1,000 a foot before i856. 8z Residen- 
tial property north of Madison and west of Halsted sold for $60 and $70 
a foot, but the cheaper property for workingmen's homes was sold for 
$15 to $20 a foot near Twenty-second and State, Roosevelt and Halsted 
and on the North Side west of Wells and south of Chicago Avenue, 
while more distant lots at Holstein at Fullerton and Western, at Bridge- 
port, Archer, and Ashland, sold for $100 each, or $4.00 a foot. 

The rapidity of the increase in the value of land within three or four 
miles from State and Madison from 1848 to 1856 was astounding. 82 
Land near State and Roosevelt Road that was offered for $200 an acre 
in 1845 s ld for from $50 to $150 a foot, 83 or an average of $20,000 an 
acre in 1856. South of Twenty-second Street, east of State, there were 
such increases from 1851 to 1856 as from $600 to $10,000 for Block 33; 
Twenty-fourth and State, 84 $620 to $26,000 for Block go; 8s and at 
Thirty-ninth and State (20 acres), from $25 to $1,000 an acre from 1850 
to i85y. 86 West of Madison and Ashland, Block 46 in section 7 in- 
creased in value from $1,250 in 1848 to $30,000 in 1854, and near 
State and North Avenue the increase was from $39 to $1,400 an acre 
from 1848 to i856. 87 Twelve acres at North, Dearborn, and Clark 
streets sold for $50 an acre in 1845, and some lots in this tract sold 
at the rate of $50,000 an acre in 185 7. 88 

The land value of the territory within the present city limits of 
Chicago had increased from an estimated total of $1,400,000 in 1842 to 

80 Ibid., December 22, 1855. 

81 Chicago Tribune, February 13, 1891. For land values in the central business district 
in 1856 see Figs. 71 and 73. 

82 An indication of the extent of the rise by 1853 in the opinion of current observers is this 
statement in the Democratic Press of July 1 1, 1853 : "Five years ago $3,000 would have pur- 
chased more land suitable for such purposes [parks] than $500,000 will now." 

*> Sale of 160 by 180 feet on State Street south of Roosevelt Road for $20,000, or $125 
a front foot, in 1856 (Chicago Daily Journal, December, 8, 1856). Sales on State, Wabash, 
and Michigan south of Roosevelt Road at from $100 to $124 a front foot at auction (ibid., 
March 26, 1856). 

8 - Shortall and Hoard's Abstracts, Vol. 41, p. 356. 

85 Ibid., Vol. 79, p. 141. 

86 Ibid., Vol. 72, p. 904. 

8 ? Chicago Title and Trust Abstracts, Vol. 1605, pp. 627, 630. 
88 Andreas, op. cit., II, 569, in article on Ogden, Sheldon & Co. 



70 ONE HUNDRED YEARS OF LAND VALUES 

$126,000,000 in the latter part of 1856, an increase of over eighty fold in 
fourteen years, most of the increase occurring in the last five years. 
The new peak was twelve times as high as the peak of 1836, which for 
many years afterward had been regarded as fantastic. As the Chicago 
Daily Press and Tribune stated in January of 1859: "The appreciation 
in Chicago real estate in the last five years has been enormous. Holders 
of any considerable parcels of property in a comparatively short period 
found themselves rich." 89 

While the land within the first mile of State and Madison increased in 
value from $810,000 in 1842 to $50,750,000 in 1856, a gain of over sixty 
fold, the greatest rate of increase came in the belts from one to four 
miles from State and Madison. The zone from one to two miles from 
the center that had been valued at $2,000,000 in 1836 and $200,000 in 
1842 had risen to a computed total of $37,000,000, a gain of 185 times 
over 1842 and of 18 times over 1836. The belt from two to three miles 
from State and Madison had gained from a computed total of $816,400 
in 1836 and $80,000 in 1842 to $18,500,000 in 1856, a gain of 230 times 
over 1842 and of 22 times over 1836. The zone from three to four miles 
from State and Madison, valued at $416,000 in 1836 and $40,000 in 
1842, had risen to an estimated value of $7,000,000 in 1856, an increase 
of 175 times over 1842 and 17 times over 1836. The outer belt of 112,- 
ooo acres with an estimated value of $12.50 an acre, or $1,400,000, in 
1836 and $2.50 an acre, or $280,000, in 1842, had increased in value to 
$12,000,000 in 1856, a gain of 43 times over 1842 and 9 times over 1836. 
The land within the first mile of State and Madison, which comprised 
56 per cent of the value of all the land in the present city limits in 1836 
and in 1842, comprised no more than 40 per cent of that total in 1856. 

The railroads had opened up the possibilities of land from one to four 
miles from the downtown section, and this area was largely subdivided 
into lots in this period. 90 Twenty-foot stores on Lake Street costing 
$10,000 to build rented for $4,500 a year, so that a value of $1,000 a 
foot for the ground was justified even at the prevailing rates of 10 per 
cent interest per annum. Land even a mile away was in demand for 
purposes involving the actual use of the ground. The fashionable de- 
mand from the newly risen crop of merchant "princes" placed a value 
of $300 to $400 a foot on the best sites on Michigan and Prairie avenues 
for $12,000, $15,000, and $25,000 homes. The values of other lands be- 

8 January 6, 1859. 90 s ee jrj g 9 on original subdivisions, 1844-62. 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES PER FRONT FOOT 
1856 



FRONT FOOT VALUES IN DOLLARS 

HU 100 AN DOVER 
50 TO 99 
26 TO 49 
4 TO 25 



BASED ON RECORDS OF ACTUAL SALES 



PREPARED BY HOMER HOYT 




FIG. ii 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES -1857 

AVERAGE VALUES FOR EACH SQUARE MILE IN DOLLARS PER ACRE 
SOURCE' ACTUAL SALES 




FlG. 12 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES - 1856 TO 1857 
INDICATED BY SALES OF ACRE TRACTS 



LEGEND 

LOCATION AND EXTENT OF AREAS SOLO 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 
SQUARE MILE SECTION 




STUCtT 
STKCIT 



FIG. 13 



74 ONE HUNDRED YEARS OF LAND VALUES 

yond the zone of actual use were based on the expectation of the con- 
tinued growth of the city. The projection of the trend of the fashion- 
able residential area southward had caused the values of lots at Twen- 
ty-second and Prairie and Michigan to rise to $50 and $60 a foot by 
1855, and similar hopes had penetrated the whole Chicago region, rais- 
ing land values to the farthest limits of the Chicago area. 91 

C. THE PERIOD FROM 1857 TO 1862. THE PANIC OF 1857 
AND THE CIVIL WAR 

The panic of 1857. While the volume of building in Chicago, the 
earnings of Chicago railroads, and the grain and lumber receipts had all 
reached new peaks in 1856 and 1857, the prices of the main staple com- 
modities had been falling from May, 1855, to December, 1856, wheat 
dropping from $2.00 to $1.00 a bushel. 93 In the summer of 1857 a finan- 
cial stringency had developed in New York which was blamed by east- 
ern interests on the overspeculation in western lands and too rapid 
railroad-building. The suspension of specie payments by New York 
banks forced a private bank in Chicago to close on August 11,1857, an d 
with their eastern bills protested two more private banks in Chicago 
closed on September 30, i857. 93 Many railroads had been built in ad- 
vance of traffic and during October, 1857, fifteen railroads with obliga- 
tions of $181,700,000, including the Illinois Central with $24,000,000 in 
debts, the Michigan Southern with $18,000,000, and the Michigan 
Central with $14,000,000, were forced to make assignments for the 
benefit of creditors. The prices of railway shares broke sharply on the 
New York stock exchange during 1857, Galena stock falling from 119 
on December 15, 1856, to 54 on October 12, 1857, and during the same 
period New York Central shares fell from 93 to 53, Erie from 61 to 8, 
and Michigan Southern from 88 to 9. 94 

The depression in 1858. The effect of the panic of 1857 was felt in 
1858 when the earnings of Chicago railroads dropped from $16,768,000 
in 1857 to $13,062,000 in 1858, lumber receipts fell from 460,000,000 to 
279,000,000 board feet, and the volume of new buildings and public im- 
provements declined from $6,423,518 to $3,246,400 in the same period. 95 
Hundreds of unemployed laborers in January, 1858, offered to work for 

91 See land-value maps for 1856 (Figs. 10, n, and 12). 

9* Democratic Press, January i, 1857. 93 Chicago Press, October i, 1857. 

94 Democratic Press, December 15, 1856; Chicago Press, October 19, 1857. 

9* For 1858 building volume, Chicago Daily Press and Tribune, January i, 1859. 



THE RAILROAD ERA 75 

fifty cents a day and soup kitchens were opened to relieve the distress. 96 
In spite of the depression, the work of raising the grade of down- 
town area was being pushed vigorously forward and the growth of 
the West Side continued. Eleven hundred new buildings out of a total 
of 1,872 for the entire city were erected in that section in i858. 97 Most 
of the West Side structures were only cheap frame houses. Neverthe- 
less, these figures indicate that new construction had not altogether 
stopped. The cost of building had fallen at least one- third since 1857 
and this stimulated some new projects. 98 

Most of the holders of real estate held firmly during 1858 to the peak 
prices of 1856 according to the Chicago Daily Press and Tribune, which 
stated in its annual review on January i, 1859: "Those who are able to 
hold them [their real estate investments] will not sell below the figures 
ruling two years ago, and indeed in some parts of the city real estate is 
held at from 10 to 20 per cent advance upon those figures." It was ad- 
mitted, however, that the "lame ducks" were being forced to let go of 
their property at great sacrifices, while the number of newspaper no- 
tices of foreclosures and sheriff's sales was greatly increasing. 99 

The year 1859. There was some improvement in general business 
conditions in Chicago in 1859, with a slight gain in lumber receipts, a 
considerable gain in the hog-packing business, and no further appre- 
ciable declines in grain shipments or in railway earnings, but the vol- 
ume of building continued to decline from $3,246,400 in 1858 to $2,- 
044,000 in i859 IO an d land values had by this time fallen sharply. 
John S. Wright, in a letter of March, 1860, says that "all property but 
central has depreciated at least one-half since 1857. " I01 

The year 1860. Although the total liabilities involved in failures in 
Chicago declined from $2,651,000 in 1859 to $1,288,589 in i86o, 102 and 
the Illinois banks of issue, having successfully weathered the storm of 
1857, seemed to be in a highly prosperous condition, the value of new 
buildings again fell to $1,188,300 in 1860 and rents and land values 103 

96 Goodspeed and Healy, op. tit., I, 280, 285. 

" Chicago Daily Press and Tribune, January i, 1859. 

* 8 Ibid . 99 ibid. 

100 Chicago Press Tribune, January 4, 1860. 

101 John S. Wright, Chicago, Past, Present and Future (Chicago, 1868), p. 12. 
103 Chicago Tribune, January i, 1861. 

J 3 "Great numbers of workers left the city for want of employment and those who re- 
mained were obliged to go into narrowed quarters to reduce expenses. This caused a great 



76 ONE HUNDRED YEARS OF LAND VALUES 

declined still further. John S. Wright, who was a close observer and in- 
clined to be optimistic rather than the reverse, stated in his circular 
letter of 1861, "Prices of central lots are reduced nearly one-half and of 
out-property about three-fourths," 104 and sample sales bear out this 
assertion. According to William J. Kerfoot, most of the working people 
who had bought lots south of Twelfth Street prior to 1857 had forfeited 
their equities by 1860. According to Colbert: 

The depreciation in the prices of corner lots was great in the winter of 1857, but 
it was much greater in 1858 and 1859, as payments matured which could not be 
met. A large proportion of the real estate in the city had been bought on canal time; 
they had depended upon a continual advance in quoted values to meet those pay- 
ments and found they could not even sell at a ruinous sacrifice. 105 

The collapse of the state banks of issue, 1861-63. The outbreak of the 
Civil War revealed the weak spot in the Illinois bank-note circulation of 
$12,320,964 secured by deposits of $14,000,000 in bonds, of which 
$9,527,500 were bonds of southern states. 106 By May 15, 1861, Missouri 
bonds had declined to 35 cents on the dollar, Tennessee bonds to 45 
cents, and Virginia bonds to 43 cents, 107 and as the security back of the 
notes was thus weakening, the state auditor called on the banks for 
additional bonds, which 17 of the banks affected were unable to furnish. 
The notes of the state banks soon fell into a chaotic condition, fluctuat- 
ing daily and ranging in value from 20 cents on the dollar to par. By 
1862 the notes of only 3 banks in Illinois were at par, and by 1864, after 
98 banks had suspended, only 23 were attempting to maintain an exist- 
ence. 108 A situation in which there was circulating in the United States 
7,000 genuine notes of 1,600 different state banks of issue which were at 
varying rates of discount, mingled with which were 5,500 varieties of 
altered and counterfeit notes, was a serious handicap to every type of 

many residences and stores to be vacated, and brought about a reduction in rents in those 
still occupied, which impoverished even those who were able to hold on to their property. 
Many hundreds of lots and houses were abandoned by those who had made only partial 
payments, and the holders of mortgages needed no snap-judgment to enable them to take 
possession" (quoted in Chamberlin, op. cit., pp. 201-2). 

104 Wright, op. cit., p. 14. 

lo s Colbert and Chamberlin, Chicago and the Great Conflagration, pp. 95- 96. 

106 Andreas, op. cit., II, 619. 

107 Financing an Empire: A History of Banking in Illinois (Chicago: S. J. Clarke Pub- 
lishing Co., 1926), 1, 159. 

108 Ibid. 



THE RAILROAD ERA 77 

business, but fortunately this confusion was all swept away by the new 
national banking act of 1863 and the later tax on state bank notes. 

Meanwhile, notwithstanding the gloom that attended the beginning 
of the war with the southern states, in which building operations prac- 
tically came to a standstill, with only $797,800 worth of new buildings 
in 1 86 1 and $525,000 worth in i862, 109 the European need for American 
wheat and the war demands for grain and meat sent Chicago wheat 
shipments up from 11,000,000 bushels in 1858 to 24,000,000 bushels in 
1 86 1, and corn shipments from 4,000,000 to 24,000,000 bushels at the 
same time, increased the number of hogs packed from 100,000 in 1857- 
58 to 970,000 in 1862-63, an d gave the railroads a profitable business in 
transporting soldiers and in hauling grain and live stock. 110 The popula- 
tion of the West Side again doubled between 1856 and 1862, increasing 
from 28,250 to 57,193, while the number of people in the entire city rose 
from 84,113 to 138,186 in the same time. 111 

The horse railways. Meanwhile, beginning in 1859, three systems of 
horse street-car lines were inaugurated, one in each division of the city. 
The South Side system starting at State and Randolph had a single- 
track line on State Street as far south as Roosevelt Road by April 25, 
1859, and before the end of 1859 had been extended to Twenty-second 
and State streets, thence east on Twenty-second to Cottage Grove and 
down Cottage Grove to the Fair Grounds at Thirty-fifth Street." 2 A 
branch from the State Street line was built down Archer Avenue to 
Bridgeport near Ashland Avenue in 1864 and 1865, the State Street 
line was extended from Twenty-second to Thirty-first Street in 1866, 
and a line was constructed down Indiana Avenue from Twenty-second 
to Thirty-first in 1864. The State Street line was extremely crowded 
from the very beginning, because the streets had fallen into such bad 
repair that it was difficult to drive horses over them. 

The West Side system had two main lines running due westward, one 
on Madison Street and the other on Randolph and Lake streets. Cross- 
ing these two lines at right angles was the Halsted Street line, which 
turned northwest along Milwaukee Avenue and southwest along Blue 

109 Chicago Tribune, January i, 1863. 

110 Moses and Kirkland, op. cit., I, 393. 
'"Ibid., II, 613. 

112 Ibid., pp. 529-30; also letter and map from Mr. Sullivan, assistant to president of 
Chicago Surface Lines. See maps showing extensions of surface lines (Fig. 23, supra). 



78 ONE HUNDRED YEARS OF LAND VALUES 

Island Avenue. All'of these lines except the one on Lake Street con- 
verged at Madison and Halsted streets and sent their combined traffic 
load over Madison Street to the central business district. The North 
Side system began on the north side of the main river. It had its main 
stem on Clark and Broadway, which was completed by 1863, north to 
Irving Park Boulevard and thence west to Ashland. In 1859 a short 
branch was constructed on Chicago Avenue from Clark Street west to 
the north branch of the river, and in 1865 another branch was built 
down Division Street to Clybourn and thence to Larrabee Street. 113 An 
attempt to unite the North Side and South Side systems by laying 
tracks over the Clark Street bridge was defeated by an injunction in 

1860. The horse street-car lines thus followed in the main the principal 
routes of the omnibus lines; and, while the older system continued to 
compete with the car lines for a time, it was handicapped by the bad 
condition of the pavements and the new car lines soon gained most of 
the traffic. 

Land values in 1862. Notwithstanding the rise of Chicago to the 
leading position in pork-packing by 1863, the rapid growth of the city, 
particularly the west division of it, in population, and a big increase in 
the grain trade, land values in Chicago remained extremely depressed 
during 1862. Washington Street, east of Clark Street, valued at $500 a 
foot in 1856, had dropped to $250 a foot by 1861 ; Madison near Clark 
and State near Monroe had fallen from $250 and $300 a foot to $150 a 
foot in the same period. In 1857, $80,000 was offered for the vacant 
lot, 80 by 1 80 feet, on the northwest corner of Randolph and Wells. In 

1861, when the same land was improved with a $140,000 building, the 
entire property was sold for the cost of the building alone. A 65-foot 
vacant lot on Lake Street adjoining the corner of LaSalle could have 
been sold for $65,000 in 1857. In 1861 it sold for the same price after it 
had been improved with an $80,000 building." 4 Vacant lands close to 
the settled areas on the North Side and South Side showed declines of 
50 per cent in sales values, while thirty sales of outlying acres showed an 
average fall of 67 per cent from 1856-57 to i86o-63. IIS The decline on 
the near West Side, however, was slight, as the continued growth of 
this section during the depression sustained its values. While the data 

113 See map of transportation lines, 1880 (Fig. 23, p. 126). 

114 Chicago Tribune , February 13, 1891. 

115 For sales during 1860 to 1863 see Fig. 14. 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES -I860 TO 1863 
INDICATED BY SALES OF ACRE TRACTS 



LEGEND 



LOCATION AND EXTENT OF AREAS SOLDi 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 
SQUARE MILE SECTION 




FIG. 14 



80 ONE HUNDRED YEARS OF LAND VALUES 

for the period from 1859 to 1863 are more meager than for any other 
period, it can be estimated from the basis of the sales available and 
from the statement of John S. Wright, who had an intimate knowledge 
of the facts and who, as an enthusiastic real estate promoter, would be 
inclined to minimize the extent of the decline in land values, that the 
value of Chicago land had fallen from its total of $126,000,000 in 1856 
to not over $60,000,000 in i86i." 6 

116 Andreas, op. cit., II, 571 : "In 1858 the purchases that were made in prior years under 

speculative influences were largely on time The crash of 1857 lessened the possibility 

of making such payments. In consequence of this difficulty, the unpromising aspect of the 
future and the depression in prices brought, since their purchase of the realty, the owners 
very generally relinquished their purchases and lost all payments made on account. In 
1859 real estate had a hard struggle to maintain any recognition, except that it was a quick- 
sand wherein all money deposited would only be swallowed up." 



CHAPTER III 

THE LAND BOOM THAT FOLLOWED A PANIC, 
A CIVIL WAR, AND A GREAT FIRE, 

1863-77 

A. THE LATER CIVIL WAR PERIOD, 1863-65 

The physical growth of Chicago and the rise of its land values, as 
indicated in the last chapter, were temporarily checked, first, by the 
panic of 1857, and, second, by the outbreak of the Civil War. The loss 
of southern credits, the collapse of the state banks of issue, whose, 
notes were secured largely by the bonds of the seceding states, and the 
fears that the permanent disruption of the Union would destroy old 
trade relationships had at first intensified the depression that followed 
the commercial crisis of 1857. The war that had seemed so disastrous 
to local business interests in 1861 had, however, assumed an entirely 
different aspect by the fall of 1862. The western agricultural states that 
had supplied the cotton-raising states with some of the latter's food 
found that their southern market connections were severed by war, at 
the very time when the war requirements of the North and the needs 
of Europe, now much greater because of poor crops abroad in 1860, 
1861, and 1862, were rapidly increasing the eastern market for grain 
and meat products. As the railroad center of the West and the termi- 
nus of the eastern lines, Chicago was the collecting and forwarding point 
of this suddenly increased flow of foodstuffs from the West to the Atlan- 
tic seaboard. From 1860 to 1862 the total grain receipts of Chicago in- 
creased from thirty-one million to over fifty-six million bushels. 1 The 
city became the leading pork-packing center of the world. 

Chicago profited by the Civil War in many other ways. The draft, 
depleting the labor supply on the farms, accelerated the demand for 
Chicago-built farm machinery. The movements of soldiers and muni- 
tions of war gave a heavy volume of profitable business to the Chicago 
railroads. The imperative war demands for food products, wagons, 
uniforms, and camp equipment forced a rapid development of local 

1 Chamberlin, op. cit., p. 285. 

81 



82 ONE HUNDRED YEARS OF LAND VALUES 

firms engaged in manufacturing and distributing these essential sup- 
plies. Far removed from the seat of actual conflict, Chicago received 
the influx of capital whose security was endangered in the border states. 
It was the Mecca of draft dodgers and war profiteers as well. Further- 
more, the financial requirements of war had led to the establishment of a 
national banking system in 1863 and to an inflation of the currency 
with a resulting rise in prices that presented opportunities for making 
great profits to the holders of war contracts. Seventeen national banks 
in Chicago by 1865 attested to the rapid rise of its new financial order. 
The scale of business operations and the magnitude of profits were 
lifted by war to an altitude hitherto unknown. During the period of the 
Civil War, Chicago, as Colbert said, "became the paradise of workers 
and speculators." 2 

The war-created business and industries of Chicago attracted labor- 
ers from Canada and from Europe. Its population increased from 109,- 
263 in 1860 to 187,446 in 1865. The annual value of new construction 
advanced from the low ebb of $525,000 in 1862 to $2,500,000 in 1863, 
and $4,700,000 in 1864.3 By the end of 1864 Chicago was solidly built 
up for three miles in every direction from its center, with a settled 
area of eighteen square miles. 4 The purchase of land along the horse- 
car lines and adjacent to the occupied portions for actual building pur- 
poses had raised the value of such close-in vacant land from 10 to 15 
per cent during 1864. At the same time rising rents of improved busi- 
ness property in the downtown area had caused a rise of 20 per cent in 
land values in the business center. 5 Compared with the great advances 
that had taken place in commodity prices, however, these gains in land 
values, confined as they were to a few localities, were small. 

B. THE POST-WAR BOOM, 1865-71 

Growth of Chicago's trade and manufactures, 1865-71. The transi- 
tion from war to peace caused marked industrial readjustments. The 
prices of the leading staple commodities had declined 50 per cent from 
September, 1864, to May, i865. 6 The demand for war materials 
abruptly ceased. Thousands of soldiers had to find places in factories or 

2 Colbert and Chamberlin, op. cit. (1872), p. 116. 

3 Chicago Tribune, January i, 1865. 

Colbert and Chamberlin, op. cit., p. 119. 
Ibid., p. 118. 6 See Fig. 95. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 83 

on the farms. The South, prostrated by defeat, with its old slave- 
owning aristocracy ruined, no longer afforded a profitable market for 
the products of the North. 

In spite of these adverse factors, the North quickly entered 
into an era of rapid industrial expansion. The introduction of the^. 
Bessemer process for making steel and the use of coke for smelting iron 
ore both coming into use at the close of the Civil War caused an 
enormous growth of bituminous coal mining and of the iron and steel 
industries. The railroad mileage of the United States doubled from 
1865 to 1873, 33,000 miles being constructed in the six years preceding 
the panic of 1873. 

Chicago was in a position, situated as it was between the thick de- 
posits of Illinois coal and the rich iron mines of the Mesabi range, wifch 
the Great Lakes connecting the two, to reap exceptional gains from 
this industrial revolution. Already paramount as a railroad center even 
before the Civil War, the extension of the railway net westward from 
the Mississippi River added the rapidly growing West to its hinterland 
and absorbed portions of the tributary territory of its rivals. The Bur- 
lington and Rock Island railroads made Iowa, Kansas, and Nebraska 
dependent on the Chicago market, and the Chicago and Alton Rail- 
road diverted much of the trade of southern Illinois and eastern Mis- 
souri from St. Louis that was at their very door to the city on the lakes. 7 
The completion of the Union Pacific and the Central Pacific across the 
continent in 1869 brought Chicago in contact with the Pacific Coast 
and the trade of the Orient. Such was the wider market gained for 
Chicago by the extension of the mileage of its railroads from 4,912 in 
1860 to 7,019 in 1869, while the profits to the railroads themselves were 
shown by an increase in their earnings from $17,609,314 to $48,886,- 

305 - 8 

The Chicago wholesale houses took full advantage of the opportu- 
nity created by the railroads. Not waiting for business to come to them 
through the new channels, they sent out "drummers" to the western 
states to solicit orders a business policy unknown before the war. As 
a result of such tactics and the advantages of their position, the whole- 
sale and produce business of Chicago increased from less than $100,- 
000,000 in 1860 to $400,000,000 annually after i868. 9 Whereas before 

7 Lewis and Smith, Chicago: A History of Its Reputation, p. 108. 

8 Moses and Kirkland, op. cit., I, 142. 9 Chamberlin, op. oil., p. 121. 



84 ONE HUNDRED YEARS OF LAND VALUES 

the Civil War there was not a mercantile house in Chicago with an 
annual volume of sales exceeding $600,000, in 1866 there were twenty- 
two firms whose sales exceeded $1,000,000 a year. In the one year 1872 
one firm alone, Field, Leiter and Company, reported sales of $20,000,- 
ooo and a profit of $i,ooo,ooo. 10 

Meanwhile, the traffic in the original staple articles of Chicago's 
commerce, the lake-carried lumber and grain, had been continually 
growing. The tonnage of lake vessels had increased from 1,931,692 in 
1860 to 3,125,400 in 1869. As many as three hundred sailing vessels, 
loaded with lumber, entered the harbor within twelve hours, passing 
the drawbridges at the rate of two a minute." Such was the flood of 
pine lumber that poured into Chicago annually when its volume 
reached a billion board feet in 1868, a fourfold increase over 1861; 
and when it required five hundred acres of lumber yards along the 
south branch of the river for the temporary storage of as many as 
fifty million boards." Millions of these pine boards from the forests of 
Michigan were hauled westward on the railroads, and other millions 
became embodied in the thousands of pine structures that were an- 
nually going up in Chicago. 

The annual receipts of sixty million bushels of grain were handled 
with greater facility and dispatch through the medium of the seventeen 
elevators of 1870 than a million bushels of grain had been marketed by 
the jostling teamsters on Lake Street in 1847. Warehouse receipts and 
dealings in futures, inaugurated by government necessities in the Civil 
War, had transformed the grain market from the dealing in a bulky 
commodity by actual inspection and delivery of the thing itself to a 
transfer of the rights of ownership to so many bushels of grain of a given 
quality stored in an elevator. 

Of greater significance, however, to the growth of Chicago in this 
period than either the wholesale or the grain and lumber trades was the 
sensational growth of its manufacturing. Whereas before the Civil 
War the city of Chicago was known as the great "northwestern ex- 
change," a buyer and seller on a great scale, but as a fabricator of but 
a few articles, by 1867 nearly everything of much bulk used on the rail- 
roads, in farming or in the building or furnishing of houses, was made 
in Chicago. "The prairie world is mowed and reaped by machines made 

10 Ibid., p. 123. 

11 James Parton in Atlantic Monthly, March, 1867, P- 335- 
" Chamberlin, op. cit., p. 282. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 85 

in Chicago." 13 In addition to heavy iron, steel, and wood products, 
shoes, clothing, watches, soap, and distilled liquors were produced in 

CHICAGO TRADE AND MANUFACTURES - 1840 TO 1031 

NOTE; 1 = 3.000,000 BOARD FEET OF LUMBER, 10,000 HOGS PACKED, 
100,000 BUSHELS GRAIN : 4,000 POPULATION, $10,000,000 




FIG. 15 

large quantity. The meat-packing industry, concentrated after 1865 
in 375 acres as Thirty-ninth and Halsted streets, with 100 acres of pens, 

'3 Parton, op. /., p. 337. 



86 ONE HUNDRED YEARS OF LAND VALUES 

had secured connections with all the railroads, and continued to hold its 
leading position. In short, the rise in the value of Chicago's manu- 
factured products from $15,000,000 in 1856 to $176,000,000 in 1873 and 
the increase in the number of workers employed from 10,000 to 60,000 
were results of its expanding market and a chief cause of its growing 
population. 14 

The rapid growth of the city from 1865 to 1871 is indicated by the 
increase in its population from 187,000 to 325,000 and the expenditure 
of over $76,000,000 for new construction in the seven years from 1864 
to 1870 inclusive. The total number of buildings in Chicago had in- 
creased from 3,742 in 1848 and 19,000 in 1857 to 40,000 in 1868 and 
56,000 in i87o. IS The rate of new growth gained rapid momentum 
after the Civil War, as Table II shows. 16 

TABLE II 
VALUE OF NEW BUILDINGS ERECTED IN CHICAGO BY YEARS, 1864-70 

1864 $4,700,000 1868 $14,000,000 

1865 6,950,000 1869 11,000,000 

1866 11,000,000 1870 20,000,000 

1867 8,500,000 

Public improvements kept pace with private construction. From 
1865 to 1871 the number of miles of sewers was increased from 75 to 
151. When the increase in the volume of sewage and the industrial 
wastes poured into the stagnant Chicago River made the stench al- 
most intolerable in the sixties, the normal flow of the Chicago River 
was reversed by deepening the Illinois-Michigan Canal in 1871, thereby 
creating a current. 17 When the purity of the water supply was also 
endangered by the sporadic discharge of the wastes of the Chicago 
River into the lake, a new tunnel under the lake to a crib two miles out 
was completed in March, i867. 18 Over 18,000,000 gallons of water 
flowed daily through 154 miles of pipe in 1867, and this was increased 
to 24,000,000 gallons flowing through 275 miles of pipe in 187 1. 19 
Meanwhile, the old plank pavements had been discarded in favor of 

'* Industrial Chicago, III, 514. Chamberlin, op. cit., p. 67. 

16 Moses and Kirkland, op. cit., I, 142-43; Chicago Tribune, December 30, 1865. 

17 Colbert and Chamberlin, op. cit., p. 160. 

18 James W. Sheahan and George P. Upton, The Great Conflagration (1872), p. 41. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 87 

wooden blocks, stone, and macadam, of which the first was the favorite. 
The number of miles of street paved with wooden blocks increased 
from i\ in 1865 to 57 at the beginning of 1871, while 30 other miles 
were paved with macadam, gravel, cinders, or boulder stones. 20 Not- 
withstanding this rapid progress in paving, some 446 miles of streets, 
or 83 per cent of the total, had no paving of any kind. The number of 
miles of plank sidewalk had increased from 159 in 1854 to 900 in 1871, 
and the amount of stone sidewalks from 500 feet to 30 miles in the same 
interval. There were 6,555 lamp posts in 1871 as compared with 2,500 
in 1865. Nineteen new bridges had been built in the seven years, and 
fifteen of these were outside the main business district, serving to 
connect the outlying West Side with the North and South sides. By 
1871 there were six railroad and twenty-seven passenger bridges, cost- 
ing from $20,000 to $48,000 each, over which 246,015 pedestrians and 
45,306 vehicles passed on March 31, 1871, with an additional 7,231 
persons and 1,616 vehicles passing through the Washington Street 
tunnel on the same day. 21 This total of 253,246 persons and 46,922 
vehicles in 1871 shows a marked increase over the 73,164 persons and 
18,404 vehicles passing over all the bridges of Chicago in a single day 
in 1855, but this reflected merely a gain in population and not a 
greater mobility. 

The transformation Chicago underwent in the fourteen years from 
1853 to 1867 may also be visualized by a comparison of the following 
description with one previously given for 1853. 22 

In the heart of the town the stranger beholds blocks of stores solid, lofty and in 
the most recent taste, hotels of great magnificence and public buildings that would 
be creditable to any city. The streets are as crowded with vehicles as any in New 
York, and there is nothing exhibited in the windows of New York which may not 
be seen in those of Chicago. As the visitor passes along he sees at every moment 
some new evidence that he has arrived in a rich metropolis. Now it is a gorgeous 
and enormous carpet house that arrests his attention, now a huge dry goods store 
or a vast depot of groceries. The next moment he finds himself peering into a 
restaurant as splendid as a steamboat and larger than Taylor's or into a dining 
room window, where in addition to the delicacies of the season there is a spacious 
cake of ice covered with naked frogs, reposing picturesquely in parsley. Farther 
on he pauses before a jeweler's, brilliant with gold, silver, diamonds and pictures, 
where a single item of last year's business was the sale of 3200 watches. 

Along the lake, south of the river for two or three miles extend the beautiful 

20 Colbert and Chamberlin, op. tit., p. 161. 

21 Ibid., p. 160. 22 See above, chap, ii, p. 62. 



88 ONE HUNDRED YEARS OF LAND VALUES 

avenues which change insensibly into those streets of cottages and gardens which 
have given Chicago the name of the Garden City. In all Chicago there is not one 
tenement house. Thrifty workmen own the houses they live in, and the rest can 
still hire a whole house. Consequently, seven-tenths of Chicago consists of small 
wooden houses in streets with wooden sidewalks and roads of prairie black.^ 

The appearance of the city had been still further improved by 1871. 
At that time there were 60,000 buildings, 40,000 of which consisted of 
wooden houses of an average value of about $1,000 each. In the fash- 
ionable avenues of the South Side there were hundreds of marble- 
front dwellings and ornate homes ranging in value from $8,000 and 
$10,000 each to $25,000 and $100,000. In the downtown area, with its 
seventy-nine business blocks built of brick and stone to a height of 
from four to six stories, there were over sixty stores, hotels, public 
buildings, churches, depots, and elevators whose value exceeded $100- 
ooo each. 24 

Chicago shared the zeal for public improvements with many other 
American cities in that post-war decade. It was an era of extravagance 
and personal display, and people were motivated by a desire to "get 
rich quick" regardless of the means employed. In 1868 and 1869 there 
was widespread corruption in municipal and national politics. It was 
the time of the ugly scandals of the Credit Mobilier in connection with 
the building of the Union Pacific Railroad, of the wholesale plundering 
of the Tweed ring in New York City, of Jay Gould's attempt to corner 
the gold market by political manipulation, of reckless railroad financing, 
of Boss Murphy in Washington, and of the knavery of the carpet- 
baggers in the South. 25 In this general let-down of morals, public and 
private, that followed in the wake of war, Chicago did not escape. 
Extravagance, lavish expenditures for improvements, and some po- 
litical corruption were blended in the land boom that culminated in 
1873- 

C. RISE IN CHICAGO LAND VALUES, BY USE AND OCCUPATION 
AREAS, 1865-71 

The precipitous rise in Chicago land values which began in 1865, 
after reaching a peak in certain downtown sections in 1869, gained a 

a * Parton, op. tit., pp. 338-39. 2 " Colbert and Chamberlin, op. cit., pp. 288-94. 

*s For a contemporary impressionistic account of the land speculation and political cor- 
ruption of this era see Mark Twain and Charles Dudley Warner, The Gilded Age (Hartford: 
American Publishing Co., 1873), particularly pp. 254-56. For speculation in Paris in 1867 
see Emile Zola's novel, Uargeni. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 89 

fresh impetus near the parks and boulevards in 1870 and 1871. After 
a check and decline caused by the great fire on October 9, 1871, the 
rise again continued during 1872 and the spring of 1873 in certain spots 
until the record altitude was reached just before the panic of 1873. The 
entire movement cannot be described without an account of the 
changes in the use and occupation of land in certain neighborhoods 
which accompanied it. 

The main business district. In the post-war period, Chicago not 
only expanded into the prairie both solidly in long gangling lines and in 
detached settlements, but it also made a revolutionary shift at its very 
center. During the Civil War, Lake Street continued to be the leading 
retail and financial street of the city. The corner of Clark and Lake 
Street in 1865 was the best business corner in Chicago, and it was val- 
ued at $2,000 a front foot. Even at this time the growing financial 
interests were crowded southward down LaSalle and Clark streets. The 
retail trades were overflowing along Clark, Dearborn, and State streets 
toward Madison Street. The enlarged wholesale trades were encroach- 
ing on the fashionable residences at the north end of Wabash Avenue. 
The first important break toward the south came in 1865 when the 
Board of Trade moved its headquarters from LaSalle and South Water 
streets to Washington and LaSalle streets. The move was successful, 
for other financial houses followed the Board of Trade and a new finan- 
cial center was established that formed a right angle at Washington and 
LaSalle streets. The value of lots on Washington Street near that point 
increased from $150 a front foot in 1862 to $1,700 a front foot in 1871. 
The next southward projection of business was along the line of Clark 
Street, which had the heaviest traffic on account of the Clark Street 
bridge over the main channel of the river. Retail business, flowing 
south on Clark Street, struck a new center of gravity at Madison 
Street, where it struck the heavy tide of people coming from the west 
on the Madison Street horse-car lines. In 1869 the corner of Madison 
and Clark streets, selling at $3,000 a front foot, was acclaimed the 
leading business corner of Chicago. 

Meanwhile, the converging of the street-car traffic from the Cottage 
Grove, Indiana, State, and Archer lines on State Street to meet the 
West Side lines at Randolph, Madison, and Van Buren streets, and the 
southeastward trend of the fashionable residential area were favoring 
the development of State Street as the leading business center. Potter 



90 ONE HUNDRED YEARS OF LAND VALUES 

Palmer, with a fortune of several million dollars made in speculation 
in cotton during the Civil War at his disposal, bought three-quarters 
of a mile of State Street frontage. State Street was at that time a nar- 
row lane between rows of shanties, but Potter Palmer moved back the 
houses on his lots far enough to allow a hundred-foot street, and he 
coaxed or frightened his neighboring owners into doing likewise. He 
then gave the street a new character from Washington to Quincy streets 
by building a great store on the corner of Washington Street and by re- 
placing the shacks at the southwest corner of State and Quincy 
streets with a magnificent hotel. The hotel he operated himself, but the 
store he induced Field, Leiter and Company to rent for $50,000 a year 
in 1868. The removal of Marshall Field, the recognized leader of the 
merchants, from Lake Street to State Street was like a word of com- 
mand to the smaller businessmen. 26 The exodus from Lake Street was 
almost a rout. From 1869 to 1871 from thirty to forty marble-front 
buildings were erected on State Street. 27 The effect of this shift was 
registered by the sales of land near the corner of State and Madison 
streets at $300 a front foot in 1860, $500 a front foot in 1866, and $2,000 
a front foot in 1869, and by sales of lots on State Street near Madison 
at the following prices per front foot: $150 in 1862; $300 in 1866; 
$500 in 1867; $725 in February, 1868; $1,250 in November, 1868; and 
$2,000 in i87i. 28 All of the downtown streets from Washington to 
Van Buren streets were sharing in an advance that during 1868 and 
1869 was so rapid that it was said to be possible to buy one day and 
sell at a profit the next. 

Meanwhile, the wholesale trades rushed into the vacuum created by 
the withdrawal of the retail and financial interest from Lake Street, 
where land values remained stationary at not over $i,oooafront foot. 
They crowded into Randolph Street and spread down Wabash and 
Michigan avenues, sending up the value of lots on Wabash and Michi- 
gan near Jackson and Van Buren streets from $450 a front foot in 
July, 1864, to $875 a front foot in August, 1868, and $1,250 a front 
foot in March, i869. 29 

The fashionable residential areas. The value of land along streets 
made exclusive through their occupancy by the leaders of society is a 

26 Frederick Francis Cook, Bygone Days in Chicago ("Chicago, 1910), pp. 187-89. 

27 Sheahan and Upton, op. cit., p. 51. 

28 Shortall and Hoard Abstracts, Vol. 64, pp. 783-85. 
2 Ibid., Vol. 60, pp. 850-54. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 91 

direct reflection of the rise of a newly rich class during and after the 
Civil War and of extravagant tastes on the part of hitherto plain-living 
American people who had an ambition to live in mansions amid fashion- 
able surroundings. Groups of promoters and politicians combined to 
secure such public improvements as sewers, water pipes, and wooden- 
block pavements on the streets they had selected for development as 
fashionable sections. 30 Most of the improvements installed from 1865 
to 1871 were either in the downtown district or in these select areas, 
as Figure 16 shows. The districts of workingmen's homes had sewers 
and pavements only on their main business thoroughfares. The upper- 
class residential streets were located near the lake front on the North 
and South sides, although not directly on the lake shore, and on the 
West Side in a belt directly west of the main business section. In every 
case they were the farthest removed from the open sewer of the 
Chicago River and the odors of the slaughter-houses, tanneries, and 
distilleries that lined its banks. They also had the best means of trans- 
portation to the downtown area and were most abundantly supplied 
with such public facilities as sewers, pavements, sidewalks, water, and 
street lamps. The working population was barred from these exclusive 
centers by the price of the land, the annual wages of a laborer being 
insufficient to pay even the interest charges on one of these vacant 
lots, not to mention the taxes. Whereas a manual laborer could afford 
to buy or pay rent on a house costing, exclusive of the land, no more 
than $1,000, and therefore necessarily built of pine on a lot of no greater 
value than the house, the homesites in these choice avenues cost from 
$10,000 to $25,000, and upon them were built homes worth from $10,- 
ooo to $100,000 or more. 

The chief trend of fashionable development in this period was south- 
ward. The North Side, with its beautiful trees, some as tall as the 
spires of churches, had been the first residential center of the social 
leaders. Dearborn and LaSalle streets, valued at from $150 to $200 a 
front foot since 1856, still maintained their reputation, but the constant 
opening of the bridges to permit the passage of an increasing number 
of ships made the North Side exceedingly difficult of access. Some- 
times when unfavorable winds detained vessels in the lake, as many as 
three hundred were waiting to enter the Chicago River at one time. 
The description of the following scene, occurring in 1867, shows the con- 
ditions prevailing as the ships filed past the open bridges: 

3 Colbert and Chamberlin, op. tit., p. 446. 



MAP OF CHICAGO 

SHOWING 

SEWERS, PAVED STREETS AND BRIDGES 
1873 



LEGEND 

SEWERS :- UNPAVED STREETS 

= STREETS BWED WITH WOODEN BLOCKS OR GRAVEL 
BRIDGES J TUNNELS 




FIG. 1 6 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 93 

At all the bridges and on both sides of them crowds of impatient people and 
long lines of vehicles extending farther back than the eye can reach are waiting. 
Now and then the bridges can be closed for a short time and there is a tremendous 

rush to cross These are exceptional days and there are other days in which the 

bridges are seldom opened. But, we are informed that a business man who has 
any important appointment in any part of town allows one hour for possible de- 
tention at the bridges. Omnibuses leaving the hotel for a depot a quarter of a mile 
distant, but on the other side of the river, start an hour before the departure of 
the train.' 1 

To add to the difficulties, no street cars crossed the bridges from the 
North Side, while the railroad trains crossing on the grade on the north 
bank of the river further impeded traffic. The North Side fashionable 
residential area was further hemmed in between the factories and the 
slums along the north branch and by the sands along the lake shore, 
which at times were the habitat of a disreputable element. In view of 
these obstacles, it is not surprising that business men turned for their 
homesites from the North to the South Side, which was not separated 
from the main business section by a water barrier with its bridge un- 
certainties. 

Wabash and Michigan avenues had become high-grade residential 
streets south of Monroe in the forties and fifties. The southward trend 
along these streets to Twelfth and Twenty-second streets was hastened 
by the encroachment of business in the downtown area, by the increase 
in the number of wealthy men seeking homesites, and by the railroad 
and street-car transportation that made the more distant area quickly 
accessible to the main business section. One fine home on Prairie Ave- 
nue attracted others, 32 the convenience of Illinois Central Railroad 
transportation and Cottage Grove Avenue street cars drew the fash- 
ionable tide eastward, and "the avenues," Indiana, Prairie, Calumet, 
and South Park, came to be regarded as preferred residential locations. 
Sales on these thoroughfares near Twenty-second Street that had 
ranged from $20 to $35 a front foot in 1864, from $100 to $150 a foot in 
1867, and from $200 to $500 a foot in 1871, reached their apex on 
Prairie Avenue near Eighteenth Street where both Marshall Field and 
Philip D. Armour had their homes after i873. 33 At this time South Park 

3 J Parton, op. cit., pp. 335-36. 

32 Prairie Avenue near Eighteenth Street had acquired prestige since 1837 when Henry 
Clarke erected a $10,000 house there, which long stood out as a landmark on the prairie, 
over a mile from any other house. 

33 Edwards' City Directory (1873). 



94 ONE HUNDRED YEARS OF LAND VALUES 

Boulevard, with its wooden-block pavement over which 1,500 fine 
carriages traveled on Sundays to the new parks, had a higher value 
($200 a foot to $250 a foot) than the graveled Michigan Avenue. 
Farther south, east of South Park Avenue, from Thirty-first to Thirty- 
ninth Street, were streets like Champlain, Forest, and Langley, or the 
private parks like Groveland, or Ellis Avenue where residential prop- 
erty commanded $100 to $150 a front foot by 1873. Still farther south 
was fashionable Kenwood at Forty- third and the Illinois Central Rail- 
road that had spread south to Forty-fifth and Greenwood by 1873, and 
contained property that sold from at $100 to $150 a front foot for its 
deep lots. Hyde Park, from its center at Fifty- third Street and Lake 
Park Avenue, was also spreading northward and southward and ac- 
quiring a reputation as a fashionable suburb. The avenues near Michi- 
gan Avenue had been built up solidly only as far south as Twenty-sixth 
Street by the latter part of 1871. With the high-grade character of the 
suburbs to the southward already established, and with the new belt 
of parks and boulevards lying just beyond, the future growth of the 
avenues had already been projected by speculators as far south as 
Sixty-third Street. When the most distant land in the belt from State 
Street to South Park Boulevard was held at from $60 to $100 a front 
foot, its high value checked the encircling movement of workers' homes 
that had filled the land north and west of Fifty-first and State streets. 

The West Side had its own fashionable avenues for its merchants, 
lumber-dealers, and manufacturers. The territory from Lake to Van 
Buren streets, Halsted to Ashland avenues, was served by a complete 
network of sewers, wooden-block pavements, on most of the east- 
west streets by 1871, and horse-car lines on Randolph, Lake, Madison, 
Van Buren, and Halsted streets, so that it was eligible to become a 
select neighborhood. Its lots rose in value from $60 to $80 a front 
foot in 1867 to $150 and $300 a front foot in 1871, with Washington 
Boulevard the leading east-west residential street. Lots near Union 
Park, at Washington and Ashland Avenue, had sold for $100 a front 
foot in 1856, but it was not until 1864 that Ashland Boulevard from 
Monroe to Harrison Street was developed by Samuel H. Walker. By 
widening the street, platting deep lots, planting fine shade trees, pro- 
viding sewers and pavement, and building six expensive homes on six 
different corners, he made it the most fashionable street on the West 
Side by 1871." From 1867 to 1871 the value of the best Ashland Ave- 

* Chamberlin, op. cit,, pp. 255-57; Andreas, op. cit. t II, 582. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 95 

nue lots advanced from $50 a foot to $450 a foot. As on the South 
Side, the future growth of the West Side fashionable area was projected 
westward toward the new Central (now Garfield Park, and lots near 
the park, although then far removed from improvements, sold for from 
$30 to $50 a foot. 

On the North Side, while LaSalle, Dearborn, and the streets east of 
State Street failed to grow as fast as the South Side avenues, they at 
least maintained their aristocratic character, with land values ranging 
from $200 to $300 a front foot, and they secured the most ample public 
improvements in the form of sewers, water mains, and wooden-block 
pavements. 

Altogether, the 2,500 acres of land within the city limits of 1871 that 
was reserved for the upper sixth or less of the 325,000 in the city had 
acquired value of over $100,000,000 while the amount of land outside the 
city limits that speculators hoped would be occupied by the upper and 
middle classes exceeded that within the city in both quantity and value. 

The manufacturing centers, 1863-71. By 1871 the railroad arteries 
had hardened in an iron network around the downtown area. Along 
the river and its branches in the downtown area were seventeen grain 
elevators and many warehouses. 35 The McCormick reaper plant, a 
$600,000 structure, was still on the north bank of the main channel near 
the harbor. Tanneries, distilleries, flour mills, and some iron-boiler 
works faced the north branch of the river ; large breweries were located 
on the north side near the waterworks. On the near West Side, from 
the south branch to Halsted Street, south of Kinzie Street, was a tract 
of 1 60 acres devoted to steam-boiler plants and iron- and wood-manu- 
facturing plants. On the West Side, south from Van Buren along the 
south branch of the river, stretched 500 acres of lumber yards that ex- 
tended to Twenty-second and Ashland Avenue. 36 West of Twenty- 

35 These seventeen elevators loaded and unloaded wheat by steam power. The facility 
with which the grain was handled as compared with earlier methods is thus commented 
upon by James Parton in 1867: "When Chicago exported a few thousands of bushels a 
year, the business blocked the streets and filled the town with commotion, but now that it 
exports 50 or 60 million bushels, a person might live a month in Chicago without being 
aware that there was anything doing in grain" (op. cit., p. 331), 

In the grain and lumber commerce were employed 77 steamers, 118 barges, 43 tugs, 33 
scows, 613 schooners, or a total of 904 vessels of 218,215 tons, manned by 10,000 sailors. 

36 In 1867, according to an article by James Parton in the Atlantic Monthly, there were 
614,000,000 board feet of lumber or 50,000,000 pine boards stored in the miles of timber 
yards along the forks of the river. "The Harbor is choked with arriving timber vessels. 
Timber trains shoot over the prairie in every direction" (ibid., p. 333). 



96 ONE HUNDRED YEARS OF LAND VALUES 

second and Ashland Avenue a new manufacturing district, the south 
branch district, was being developed with fourteen miles of docks along 
the river, and here the new iron industries were locating. South of the 
canal at Thirty-ninth and Western Avenue, at Brighton, Adam Smith 
had a chain of small industries. South of the canal at Bridgeport, east 
of Thirty-first and Ashland Avenue, were other industries, and at Thirty- 
ninth and Halsted were the new Stock Yards where the entire meat- 
packing industry was concentrated. Light manufacturing plants, such 
as clothing and cigar factories, tinsmiths, carpenter shops, and black- 
smith shops, were scattered all along the secondary business streets on 
the horse-car routes of the city. There were other outlying centers such 
as the Rock Island carshops at Forty-seventh to Fifty-first on Went- 
worth Avenue; the carshops at Twenty-sixth Street and the Illinois 
Central Railroad; the Wagon Works at Holstein, Fullerton, and West- 
ern avenues; the Watch Factory at Cornell, Seventy-fifth, and Ellis 
avenues, and the new industrial center that was being prepared at 
South Chicago by the building of a harbor at Ninety-fifth and the lake 
and the construction of docks along the Calumet River, which were 
all pulling workers away from the center of the city. The lower taxes 
and the cheaper cost of land away from the downtown area were also 
important factors in the location of new industries. Whereas land val- 
ues on the north bank of the main channel on Kinzie Street, on the near 
West Side from Halsted Street to the river, ranged from $300 to $400 a 
front foot, or over $75,000 an acre, in the new south-branch district at 
Twenty-second and Ashland Avenue, land with dock frontage was sold 
for $12,500 an acre, and in the Stock Yards lots with the best facilities 
were sold at the rate of $4,000 an acre, while in the Calumet region land 
with river, lake, and rail connections was offered for $1,000 an acre. 
The slums, vice areas, and workingmen's quarters, 1863-71. On the 
North Side, west of Wells Street, on the West Side, north of Kinzie, 
south of Harrison Street and west of Ashland Avenue, and on the 
South Side west of State Street there were in 1871 some 40,000 frame 
houses of an average value of $1,000 each that were occupied by a 
population of over 200,000 persons. The rapid increase in the volume of 
manufacturing which employed 60,000 workers by 1873 had quad- 
rupled the population of the West Side from 1862 to 1872 (57,000- 
214,000), doubled the population of the North Side from 1862 to 1870 
(35,000-70,000), and almost doubled the population of the South Side 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 97 

from 1862 to 1872 (45, 500-88, 500) , 37 The majority of this increased 
mass of people were workers who crowded into frame cottages, some 
built on both the front and the rear of lots, near the factories along the 
river, on streets that had few sewers and practically no pavements. 
The most densely populated district was that section on the West Side 
between the south branch of the river, Halsted, Harrison, and Twenty- 
second streets, and one of the worst spots in this area, Maxwell Street 
near Halsted Street, is thus described by a current observer. 

The street may be singled out of a thousand by the peculiar, intensive stench 
that arises from pools of thick and inky compound which in many cases is several 
feet deep and occasionally expands to the width of a small lake. Almost at every 
step a dead dog, cat or rat may be seen. These unusually sagacious animals had 
mistaken this for a respectable street because it is very broad and tried to pass 
through, but with their lives had to pay for their recklessness and foolhardiness. 
The poor creatures undoubtedly died of asphyxiation. 3 8 

The vice area was then in that part of the downtown section that 
lies south of Washington Street and runs west of LaSalle Street to the 
south branch of the river, with the center of corruption in the notorious 
Conley's patch at Wells and Monroe streets. The negro population of 
the city lived chiefly in the section west of State Street just south of 
Harrison Street until the fire of 1874^ forced their removal, whereupon 
they established themselves west of State Street between Twenty- 
second and Thirty-first streets. 

The Irish had a stronghold at Bridgeport, the Swedes and Norwer 
gians were thickly settled west of Wells near Chicago Avenue, and the 
Germans west of Wells near North Avenue. Other families in the lower- 
income groups lived over stores in the downtown area or along the 
secondary business streets. A class midway between the leaders of 
society on the avenues and the laboring poor next to the factories and 
the river lived just west of State Street to the Rock Island tracks 
south of Twenty-second Street, in the section bordering the fashionable 
North Side streets on the west, or on the Northwest Side along Mil- 
waukee Avenue. The best of this medium range of property was worth 
$60 a front foot, and the poorest $20 a front foot, though some com- 
manding the higher price was in the worst slum districts, but had ac- 
quired its value because of its proximity to the main business section. 

37 Chamberlin, op. cit., p. 279. 

38 Chicago Tribune, June 19, 1873. 

39 This fire of 1874 is not to be confused with the great fire of October 9, 1871. 



98 ONE HUNDRED YEARS OF LAND VALUES 

The land occupied by nearly 250,000 persons in Chicago in 1871 did not 
have a value of over $50,000,000, while the fashionable territory occu- 
pied by less than 100,000 had a value over twice that amount. Not 
mere dense population alone, but a population with a high income 
gave residential land its highest value. 

The secondary business streets. Chicago grew fastest along the prin- 
cipal streets that had the best pavements and the street-car lines. In 
the period following the Civil War these horse-car routes, which in turn 
had followed the main omnibus routes and heavily traveled thorough- 
fares, began to develop into important business streets. The man 
who was ridiculed for building stores at Twenty-second Street and 
Michigan in 1868 reaped a net annual return of from 10 to 15 per cent 
on his pioneer venture, and by 1871 there had been a rush of business 
firms towards these arteries of traffic. West Madison Street near Hal- 
sted Street became worth $600 a front foot by 1873, and the corner of 
Madison and Halsted was sold for $1,500 a front foot at the same time, 
not far below the value of the best corners in the downtown area. 
Halsted Street from Milwaukee Avenue to Harrison Street also reached 
front-foot values as high as $500. North Clark Street frontage sold for 
$1,000 a foot just north of the main channel; it was worth $500 a foot 
at Chicago Avenue and $250 a foot north of Division Street. Milwau- 
kee Avenue was the main axis of the northwest section in which 25,000 
people lived in 1871, and had a value of from $100 to $200 a foot 
as far north as Division Street. State Street, south of Harrison to 
Thirty-ninth Street, ranged in value from $500 down to $100 a front 
foot, passing first through a belt thick with saloons and immoral re- 
sorts, and then entering a more respectable territory south of Twenty- 
second Street. Cottage Grove Avenue, also studded with saloons, 
reached values of from $100 to $150 a foot, from Twenty-second to 
Thirty-ninth streets. Lots on Archer Avenue, from State to Ashland 
Avenue, sold from $60 to $200 a foot; Blue Island Avenue lots from 
Harrison to Roosevelt Road ranged from $60 to $100 a foot; Twelfth 
Street (now Roosevelt Road) lots sold for from $150 to $200 a foot 
near Halsted down to $50 a foot near Kedzie Avenue; and Chicago 
Avenue east of the north branch ranged from $150 to $300 a foot. 
Wentworth Avenue was the leading South Side business street west of 
State Street, with its lots selling for from $60 to $100 a foot, from 
Twenty-second to Thirty-first Street. North Wells Street was an in- 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 99 

ferior North Side shopping street, supported by the workers living 
west of it. 

The parks, 1865-71. The establishment of the outer belt of parks 
and boulevards in Chicago in 1869 was one of the main factors in the 
rapid rise in land values just beyond the settled area of the city in this 
period. Prior to 1866, besides several small parks of a few acres each, 
the city had only the fifteen-acre Union Park, acquired in 1854, and the 
part of the present Lincoln Park that was converted from a cemetery 
in 1865. After the Civil War the fame of Haussman's park and boule- 
vard system in Paris reached the city that was seeking new outlets for 
fashionable expenditure, and the reports of the rapid rise of land values 
in the vicinity of Central Park in New York fired the imagination of 
real estate operators. Paul Cornell conceived the project of a large 
park on the South Side to be paid for by special assessments, and in 
February, 1867, he and his associates secured the passage of a bill (to 
become a law on the approval of the voters) authorizing the establish- 
ment of a South Park Board and the purchase of a park site to be lo- 
cated north of Thirty-fifth Street, east of Michigan Avenue, and west 
of Cottage Grove Avenue, the purchase to be made by the issuance of 
bonds which were ultimately to be retired by special assessments on the 
district benefited. 40 This bill was defeated by the voters in April, 1867, 
but the sponsors of the first bill renewed their efforts at the next session 
of the legislature and procured the passage of a second bill on February 
24, 1869, which definitely fixed the boundaries of the South Side parks 
and boulevards as they exist today in the present limits of Washington 
and Jackson parks, the Midway and Drexel, Grand and Garfield 
boulevards, and authorized a bond issue of two million dollars to pur- 
chase the area thus marked out. 41 This bill met the approval of the 
voters and became a law in March, i869. 42 Almost simultaneously with 
the passage of the South Park bill, a bill providing for the West Park 
Board and the three West Side parks Humboldt, Garfield, and 
Douglas parks was passed by the legislature and approved by the 
voters, 43 and still another bill provided 44 for the northward extension of 
Lincoln Park. 

40 Private Laws of Illinois (25th General Assembly; Springfield, 1867), II, 472-78. 

4 1 Laws of Illinois (26th General Assembly; Springfield, 1869), I, 358-66. 
* a Chambelrlin, op. cit., p. 314. 

Laws of Illinois (26th General Assembly; Springfield, 1869), I, 342-43. 
* Chamberlin, op. cit.j pp. 337-39. 



ioo ONE HUNDRED YEARS OF LAND VALUES 

The South and West Park commissioners sold their bonds and, dur- 
ing 1869 and 1870, bought the 1,100 acres for the south parks and the 
600 acres for the west parks. The effect of the purchase of this land, 
which had hitherto lain dormant a mile beyond the built-up area of the 
city, was to start a furious speculation in the land facing the parks or 
in the vicinity of the parks, which reached a high pitch of intensity, 
particularly near the south parks, just before the great fire of 1871. 
Since the movement was resumed afterward, the account of this rise in 
value of lands near the parks will be deferred until after the account of 
the fire. 45 

The suburbs. The suburban movement, which did not reach its 
culmination during this period until after the fire, also began to gain 
rapid momentum after 1868. The suburbs along the railroads had 
barely started in 1856 when the panic of 1857 an d the Civil War had 
stopped speculation in suburban lands. In 1866 there were only a few 
houses in Englewood, notwithstanding three railroad lines. Observers 
could see only ten houses between the Englewood Depot and the lake. 
Shortly afterward both Hyde Park and Englewood began to grow 
rapidly, 46 and in 1868 and 1869 new subdivisions were opened near 
Hyde Park, Englewood, and, on the northwest side, at Irving Park and 
Jefferson along the North Western Railroad. 47 

The spread of the speculative land movement, 1868-1871. Thus the 
rise in land values which began in 1863 in the downtown business 
area and in the residential streets near the horse-car lines, where it had 
increased very rapidly during 1868 and 1869 and then had begun to 
slow down; spread, after 1869, to land beyond the settled area and to 
the suburban lands along the railroads. The so-called public participa- 
tion in land-buying began about 1868 when many cases of large profits 
made in real estate since 1861 had become common knowledge, and in 

45 See pp. ooo ff . 

^ Real Estate and Building Journal, August 19, 1871: "As far south as Calumet and 
Lake townships but a few years ago was one complete swamp, having no particular use but 

for hunting and fishing If building continues at the same rate, the whole section 

south of the city limits to Englewood will be one dense mass of houses." 

47 Ibid., May 20, 1871 : "At Irving Park, at Maplewood, and at points between the latter 
and Irving Park, men are busy planting trees and shrubbery, laying walks, digging artesian 
wells and building houses which as a whole will compare favorably with those in any town 
of the United States. When two years ago there was not a house, a tree, a sidewalk, or even 
a surveyed street, there are today as handsome villages as can be found elsewhere in the 
land, numbering each from 20 to 50 as pretty villas as we ever saw." 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 101 

1871 one writer reports that every other man and every fourth woman 
in Chicago had an investment in lots. Before the rise in this outlying 
lands had reached its culmination, however, it was at first interrupted 
and then stimulated by the great fire October 9, 1871. 

D. THE GREAT FIRE OF 1871 AND THE PERIOD 
BEFORE THE PANIC OF 1873 

The great fire of October 9, 1871. It needed but a flame from an 
overturned lamp when a southwest wind was blowing with the force of 
a hurricane over an area of pine shacks and lumber yards that were 
parched from lack of appreciable rainfall for six weeks to start one of 
the greatest holocausts in history. The fire started on the West Side 
near Twelfth and Dekoven streets, but it did small damage there, and 
under ordinary conditions it would soon have burned itself out when it 
reached the river and an area that had been cleared by a fire of the night 
before. The extraordinary gale, however, swept sparks across the river 
at Harrison Street, where they rapidly started a blaze in the densely 
packed hovels of that region and, gaining a fresh start, soon generated 
an intense furnace heat that, sweeping in many columns on the main 
business district, melted down single five-story brick and stone build- 
ings in five minutes and completely destroyed the principal business 
blocks, hotels, depots, theaters, banks, newspaper offices, and govern- 
ment buildings of the city. Then in the early morning of the next day 
the flames leaped the main channel of the river and carried destruction 
to the North Side, whose factories and beautiful residences were all 
in ashes before nightfall. Before the fire burnt itself out in the coffins of 
Lincoln Park, it had swept over 2,100 acres, destroyed 17,450 of the 
60,000 buildings in the city, including all of the most valuable, ren- 
dered 104,500 persons or one-third of the population homeless, and 
caused a total loss in buildings, personal property, and merchandise of 
nearly $2oo,ooo,ooo. 48 The loss had fallen mainly on the central busi- 
ness district and the North Side, the West Side and the new residential 
sections on the South Side being left almost intact. Nevertheless it was 
such a blow that many of Chicago's commercial rivals hoped that it 
would permanently halt the industrial and commercial progress of the 
city whose growth had amazed the world. Some of its own citizens ex- 
pected that the obliteration of the downtown buildings would result in 

i 8 Colbert and Chamberlin, op. cit., pp. 285-87, 301. 



102 ONE HUNDRED YEARS OF LAND VALUES 

the shift of the main business center to a new location. The railroad 
bands of iron and steel and the trade connections of Chicago, however, 
were too thoroughly established to permit the happening of either of 
these events. The fire, nevertheless, had a permanent effect on the 
growth of the city, although many of its influences accentuated rather 
than reversed the trends already in evidence before the fire. 

Most of the 104,500 persons made homeless by the fire who did not 
leave the city found refuge on the West Side, whose population in- 
creased from 160,000 in 1871 to 214,000 in October, 1872, with the 
greatest increases taking place on the outer edge of the built-up area. 
Temporarily, West Madison Street was the most important business 
thoroughfare in the city, and land values of the near West Side reached 
a peak immediately after the fire that was not exceeded for many years 
thereafter. At the same time the value of lots on Wabash Avenue 
south of Harrison Street increased as ten bankers and the heads of 
thirty or forty other business firms opened offices in their residences. 
Marshall Field opened a store at Twentieth and State streets as well as 
one on the West Side. The fire ended the residential occupancy of the 
downtown area, where 27,800 persons had lived before; for the shacks 
in the southwest portion of it were not rebuilt, because of the change 
to a higher use. The building of temporary business offices in the 
park along the east side of Michigan Avenue so changed the appear- 
ance of that once fashionable street that the former residents sought 
new quarters in the fashionable avenues to the south. 

Meanwhile, land values in the burnt area in the main business dis- 
trict and on the North Side had declined about 30 per cent, on the 
average, 49 because of the uncertainty as to the future of this land. The 
owners of the lots bordering the smoking ruins on the south and west 
were endeavoring, by planning new buildings for its occupancy, to 
hold permanently the business that had been thrust upon them. The 
landowners in the downtown area, however, hardly waited for the 
bricks to cool before measuring the foundations of the ruins for new 
buildings that were to be more magnificent than the old. In a year of 
hectic building in which borrowed money from the East, lavishly sup- 
plied, enabled Chicago lot-owners to spend over $40,000,000 for new 
construction, most of which was in the downtown area alone, 50 the 
retail and financial interests of Chicago were drawn back to the same 

Ibid., p. 302. so Chicago Tribune, October 9, 1872. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 103 

locations in which, they had established themselves shortly before the 
fire. State Street, from Washington to Monroe, as reconstructed, was 
heralded as the finest retail section in America. Washington Street, near 
LaSalle Street, had attracted to it seventeen of the national banks. 

The land values in the south end of the central business district fully 
recovered their ante-fire levels. Meanwhile, Wabash Avenue, south of 
Harrison to Twenty-second Street, was deserted by the banks and 
business. Its career as a fashionable residential street was ruined by the 
temporary influx of business, and it assumed a mixed business and 
residential character as its old mansions were given over to boarding- 
houses. Its rents declined 30 per cent during 1872. Thus the first 
tendency of values in the burnt area to decline, and that of land values 
on the edge of the burnt area to advance, was reversed in less than a 
year after the fire. The retail and financial interests were more firmly 
intrenched than ever in the positions they had assumed after the shift 
from Lake Street. 

There were other lasting effects of the fire, however, in addition to 
those already noted. The fashionable North Side, while largely rebuilt 
within a year after the fire, had received a setback from which it did 
not .soon recover, and the already pronounced drift to the South Side 
avenues received additional impetus. The very competition in building 
between the business section in the burnt area and that on the edge of 
it had produced a surplus of large stores with a consequent decline in 
rents in most locations except on State Street, Madison, Washington, 
and LaSalle streets near the centers of retail trade and finance. The 
destruction of the shanties of the old vice area south of Washington 
Street to Harrison Street and west of Wells Street to the river had 
forced a concentration of the immoral houses into the old territory un- 
touched by the fire that lay south of Harrison Street, west of State 
Street. The area purified by the fire along Wells, Franklin, and Monroe 
streets was taken over as a new center for wholesale trade, for lots there 
could be bought for $500 a front foot as compared with $1,000 a front 
foot or more demanded on Lake, Randolph, and Wabash Avenue. A 
further effect of the fire was to hasten other tendencies that were in 
progress before, for when their buildings were destroyed, part of the 
inertia that held their occupants to old locations, despite the superior 
advantages of a new site, was likewise destroyed. McCormick did not 
rebuild his reaper plant on the expensive ground along the north side 



104 ONE HUNDRED YEARS OF LAND VALUES 

of the main channel of the Chicago River, but in the new south- 
branch manufacturing district near Twenty-second and Western 
avenue. The last of the banks and retail establishments left Lake 
Street to occupy new quarters near the new centers of trade and 
finance. Thus within a year after the fire, the downtown area had been 
reconstructed with new brick and stone buildings that were predomi- 
nantly four and five stories high, with three seven-story and six eight- 
story buildings looming slightly above the rest. 51 In the enthusiasm of 
the rebuilding and the triumphant emergence of a new city from the 
ashes of the old, the fire had almost seemed a blessing. While the 
boom lasted, it was forgotten that the new buildings had been erected 
at very high costs on borrowed money bearing interest at the rate of 
8 per cent per annum that would fall due five years in the future. The 
outward magnificence of the buildings did not disclose the fact that 
they were nearly all covered with mortgages. 

The fire had also another very important effect in that it accelerated 
the building of a belt of workingmen's cottages in a semicircle around 
the outskirts of the city. An ordinance, enacted after the fire, had pro- 
hibited the erection of wooden buildings near the center of the city. 52 
As the workers could afford to live in no other kind and also found that 
new carshops, such as those of the North Western Railroad near Craw- 
ford and Kinzie street, the iron works, the Stock Yards, and the new 
McCormick plant, were all being located on the edge of the built-up 
area, they began to seek homesites outside of the fire limits. The gen- 
eral industrial prosperity and the rush of reconstruction which had 
raised the wages of skilled mechanics to five dollars and as high as ten 
dollars a day had given the workers means to buy lots for homes and 
for speculation. Moreover, the passion to own land that seemed to be 
the very basis of independence to immigrants who had been oppressed 
by the landlords of Europe had given them the desire to invest in land. 
This encircling belt of frame houses that grew rapidly during 1872 
started on the North Side at Fullerton Avenue west of Lincoln Avenue, 
and stretched southward to North Avenue and westward to the north 
branch. Beginning again west of Milwaukee Avenue, it filled in the 
space as far west as Western Avenue and as far south as Kinzie Street ; 
then, after a break, it covered the territory from Madison Avenue to 
Ogden Avenue east of Western Avenue to Roosevelt Road. Com- 

51 Ibid. 53 See map of fire limits in 1873 in Fig. 17. 



MAP OF CHICAGO 

- SHOWING - 



THE BURNED AREA-I87I 

AND 
FIRE LIMITS- 1872 



CORPORATE LIMITS OF CHICAGO 




FIG. 17 




MAP OF CHICAGO 

- SHOWING - 



EXTENT OF SETTLED AREA 

FOR THE PERIODS 
1834, 1844. 1857 AND 1873 



^H EXTENT OF SETTLED AREA IN 1634 
HH GROWTH OF SETTLED AREA FROM 1834- 44 
^j GROWTH OF SETTLED AREA FROM 1844-1857 
iHU GROWTH OF SETTLED AREA FROM 1657-1873 



NOTE:BA3E MAP SHOWS PRESENT CITY STRUCTURE 



PREPARED BY HOMER HOYT 



FIG. 1 8 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 107 

meriting again south of the Chicago, Burlington and Quincy tracks at 
Sixteenth Street, it proceeded south to Blue Island Avenue and to 
Twenty-sixth and California Avenue past the McCormick reaper 
plant. Crossing the Illinois and Michigan Canal, it began again at 
Brighton, Thirty- third and Western Avenue, where a number of enter- 
prises were conducted by Adam Smith. Finally, it swung around the 
Stock Yards to the Rock Island carshops at Fifty-first and Wentworth 
Avenue, until it came to an end at State Street. 53 In addition to this 
belt, seven miles long and one mile broad, that adjoined the solid 
growth of the city, there were streamers of a straggling growth of frame 
cottages radiating from Englewood along the railroads, northward to- 
ward Fifty-fifth Street, southwestward toward South Englewood and 
Washington Heights, and southeastward toward Grand Crossing and 
South Chicago. 

The great fire temporarily checked but did not stop suburban devel- 
opment. In 1872 and the early part of 1873 this movement raged with 
greater fervor than ever. The fire hazard and the prohibition of wooden 
structures inside the fire limits were now added reasons for leaving the 
close confines of the city. Therefore, the rise in the value of outlying 
lands near Chicago will be discussed as one continuous movement that 
lasted from 1865 to 1873. 

Increase in the value of outlying lands, 1865-73. The period from 
1865 to 1873 witnessed a remarkable increase in the value of all the 
land lying from three to eight miles from the center of the city. On the 
fashionable avenues south of the built-up areas on the South Side, there 
were such gains from 1866 to 1873 as from $500 to $10,000 an acre at 
Forty-seventh and State streets, 54 and from $1,000 to $20,000 an acre 
at Fifty-first and Drexel Boulevard, while some land near the village of 
Hyde Park is reported to have increased from $100 to $15,000 an 
acre from 1865 to i873. 55 Gains almost as great were reported near the 
West Side parks, as land near Garfield (then Central) Park sold for 
$275 an acre in 1867 and $4,000 an acre in 1873 ; 56 near Douglas Park 
there was a rise in land values of from $500 to $3,500 an acre in the same 
interval, 57 and near Humboldt Park the gain was from $250 to $5,000 

53 Chicago Tribune, May 18, 1873. 

Chamberlin, op. cit., p. 309. & Ibid., p. 353. 

s 6 Chicago Title and Trust Company Abstracts, Vol. 5391, p. 638. 



io8 ONE HUNDRED YEARS OF LAND VALUES 

an acre from 1869 to i873. s8 North of Lincoln Park, from Belmont to 
Fullerton, land values tripled from 1868 to 1872, with lots on Welling- 
ton and Barry avenues near the lake selling for $125 a front foot. 59 

The rapid rate of increase was not confined to the fashionable sec- 
tions. Land west of State Street, near Thirty-fifth Street, rose from 
$1,000 to nearly $15,000 an acre, and in the Stock Yards, at Thirty- 
ninth and Halsted streets, sales per acre registered increases thus: 
$70 in 1863, $250 in 1864, $1,000 in 1868, and $4,000 in i872. 6 

The growth of the young suburban towns and the birth of new ones 
were followed by the dazzling transformation of farms that sold for 
$25 to $100 an acre into staked and platted town lots that brought $400 
to $1,000 apiece, although their outward appearance changed but 
little. Excursion trains carried a thousand people to auction sales of 
lots at which sales of $500,000 were made in a single day. At Cornell, 
or Grand Crossing, Mr. Cornell bought land for $25 an acre in 1865 and 
sold it at $300 a lot, or $3,000 an acre, in 1873. After Hyde Park and 
Englewood had reported gains in land values ranging from 1,000 to 
15,000 per cent in five or six years, the speculative fever spread to more 
distant suburbs. Washington Heights, along the Rock Island Rail- 
road, from Eighty-seventh to One Hundred and Nineteenth streets, 
because of its suburban railroad service and a proposed branch line that 
was to connect it with the industrial section at South Chicago, became 
the scene of intense activity in the first six months of 1873, when sales 
to the amount of $2,000,000 were made. The advance in the sales price 
per acre of one tract near Ninety-fifth and Ashland Avenue is thus re- 
corded: $50, $68, and $100 in 1868; $150 and $250, in 1869; $400 in 
1871; $1,000, $1,375, an d $1,500 in 1873, as the brokers received over 
$11,000 in commissions in turning over one forty-acre tract. 61 The 
Blue Island Land Company which started this ball rolling on a cash 
outlay of $35,000 had apparent profits of nearly $1,000,000 in 1873. In 
South Chicago, the Calumet Canal and Dock Company had acquired 
six thousand acres of land on the Lake and Calumet River at the price 
of $1.25 to $100 an acre, had secured a government appropriation of 
$50,000 for a harbor, had built docks, secured railway connections, and 
platted a new town on the site of the old subdivisions of Calumet and 

s Chamberlin, op, tit., p. 335. 59 ibid., p . 349 . 

60 Chicago Title and Trust Company Abstracts, Vol. 1830, pp. 522-38. 

61 Chamberlin, op. tit., p. 223. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 109 

George that had been abandoned after 1836. In 1874 their holdings 
were appraised at $5,700,000 or nearly $1,000 an acre, and lots were 
being sold to workers not only in the close vicinity of Calumet Harbor, 
but also in the hitherto neglected swamps near Lake Calumet and in 
distant Riverdale at One Hundred and Thirty-eighth and Indiana Ave- 
nue. 

West of the downtown area along the Galena division of the North 
Western Railroad, attracted by the land operations of a syndicate that 
had bought land for the new carshops west of Crawford Avenue, by the 
West Side parks, and by the widely heralded advantages of suburban 
life along the railroads, was another line of new subdivisions that ex- 
tended far beyond the western limits of the city. Northwestward along 
the original line of the Chicago and North Western Railroad land worth 
less than $100 an acre in 1865 was selling at Irving Park, Jefferson, and 
Norwood Park at from $1,000 to $3,000 an acre in lots. Due north 
along the Chicago and Milwaukee Railroad were the subdivisions 
at Ravenswood and Rogers Park in the present city limits and a line 
of new or rapidly growing suburban towns from Evanston and Wil- 
mette to Lake Forest and Waukegan. 

As speculative activities thus extended far along the railroad lines, 
the spaces in between that were within twelve miles of the center of the 
city were not neglected. That distant belt of land from Fifty-fifth to 
Eighty-seventh Street, Kedzie to Cicero Avenue, that is still to a large 
extent vacant because of the projected Chicago, Danville and Vin- 
cennes Railroad along the line of Central Park Avenue, rose in value 
from $50 an acre in 1868 to $500 and $1,000 an acre in 1873. 

The population of Chicago had grown rapidly from 1860 to 1873, and 
it had spread out until in 1870 the population living from three to five 
miles from the center of the city numbered 55,000 as compared with 
8,000 in 1860. By 1873 the population in this outer belt had increased 
to nearly 100,000. The increase in the number of inhabitants could not, 
however, keep pace with the increase in the number of lots that were 
subdivided and offered for sale in this period. Within the 1873 corporate 
limits of Chicago were 104,411 lots, of which probably over half were 
occupied in 1873, and in Cook County outside of Chicago were 120,301 
more lots, nearly all of which were vacant. Enough lots had been sub- 
divided from 1868 to 1873 to provide for a total of over 1,000,000 people 
when the population of the Chicago area was still less than 400,000 in 



MAP OF CHICAGO 

-SHOWING - 



ORIGINAL SUBDIVISIONS 
1863 TO 1879 



LEGEND FOR DATA 

AREAS SUBDIVIDED BEFORE 1363 
AREAS SUBDIVIDED FROM 1863 TO 1866 
AREAS SUBDIVIDED FROM 1867 TO 1874 



|" 1 AREAS SUBDIVIDED INTO 5 AND 10 ACRE 
fc- TRACTS FROM 1867 TO 1874 

|j|il:j|| AREAS SUBDIVIDED FROM 1875 TO 1879 



iitll I I 




FIG. 19 



A PANIC, A CIVIL WAR, AND A GREAT FIRE in 

i873. 62 The extent of the growth of the straggling suburbs with their 
scattered houses is not to be overemphasized. In all the 36 square miles 
of Lake Township there were only 3,360 persons in 1870, and all the 
territory south of Thirty-ninth Street to One Hundred and Thirty- 
eighth Street from State Street to the lake contained only 3,644 people 
in the same year. The growth of the city pushing farthest along the 
main streets had nearly reached Kedzie Avenue at Madison Street; 
it had proceeded to Thirty-ninth and Cottage Grove Avenue and Mil- 
waukee and North avenues, but in between there were many gaps and 
stretches of undeveloped land. The two hundred or more houses within 
a mile of Englewood in 1873 made an imposing appearance in contrast 
with the vacant prairie of a few years before, 63 but the population of 
even such settled areas was sparse in comparison with the compact 
settlement of the same land at the present time. Not only were there 
great belts of vacant land such as that from Thirty-fifth to Sixty-third 
Street, east of State Street, that varied in width from half a mile to 
over a mile, but the great tract of land on the South Side south of Sixty- 
seventh Street and west of Ashland Avenue was nearly all vacant, 
except for the small settlements at Cornell and South Chicago. The 
land on the North Side north of Fullerton and west of Western Avenue 
was an almost empty prairie. 

A survey of Chicago land values at the peak of 1873. In the ten 
years from the autumn of 1862 to the spring of 1873, the total value of 
the 211 square miles of land in the present city limits of Chicago had 
increased nearly 500 per cent, or from approximately $60,000,000 to a 
computed total of $575,000,000 notwithstanding the decline of over 50 
per cent in the level of wholesale prices that had occurred after i864. 64 
Compared with the peak of 1856, Chicago land values had increased 
360 per cent on the average, although the level of wholesale prices 
was no more than 20 per cent higher in 1873 than in 1856. The peak 
values of land by uses in 1873 were $2,000 a front foot for the best in- 
side retail business and financial center lots on State and Washington 
streets and $2,500 to $3,000 a foot for the best corners on State Street 

6a On the basis of a family of five persons for each vacant 5o-by-i 25-foot lot. For the 
figures as to the number of lots in 1873 see Chamberlin, op. cit., pp. 186-87. 

6 3 Frontispiece in Story of Englewood shows a bird's-eye view of Englewood in 1872. 

64 For detailed prices by sections see Figs. 20, 21, and 22. 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES PER FRONT FOOT 
1873 



FRONT FOOT VALUES IN DOLLARS 

100 AND OVER 



50 TO 99 
26 TO 49 
4 TO 25 



BASED ON RECORDS OF ACTUAL SALES 
PREPARED BY HOMER HOYT 




I * 



FIG. 20 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 113 

at Washington, Madison, and Monroe, 65 at Washington and LaSalle 
and Clark and Madison, $500 to $1,250 a foot for lots in the wholesale 
section in the downtown area, $300 to $400 a foot for manufacturing 
sites on the south branch near Western Avenue, $250 to $500 a foot for 
the most fashionable residence property, $100 to $150 a foot for the 
middle-class homesites, $20 to $60 a foot for workers' homes, $500 to 
$1,000 a foot for the best sites on secondary business streets, and $50 to 
$200 a foot for inferior locations on commercial streets in the poorer 
quarters, $10 to $100 a foot for suburban lots, and $500 to $2,000 an 
acre for outlying land near the city. It was contended by current writ- 
ers that these values were low and that the land in the downtown area, 
on the basis of capitalized rents, should sell for three times as much as 
its ruling market price. The optimists, who already predicted that the 
young city would eventually be the largest in the world, compared the 
peak price of $30 a square foot for the most expensive Chicago land 
with the $100 a square foot paid in Boston, the $167 a square foot in 
New York and the $320 a square foot in London. 66 

The outstanding feature in the rise of Chicago land values in the 
period from 1862 to 1873 had been the extraordinary advance in the 
value of the land from three miles to six and eight miles from the center 
of the city, particularly on the South Side where the fashionable avenues, 
the aristocratic suburbs, the largest parks, and five of the ten trunk- 
line railroads combined to send land values south of Thirty-ninth Street 
upward from a few million dollars in 1862 to $123,000,000 in 1873. 
While the average gain in value in the area within one mile from State 
and Madison streets from 1856 to 1873 had been only 150 per cent, with 
lots on Lake Street and South Water Street actually declining in selling 
price, and while the belts from one to two miles from State and Madi- 
son streets had gained 180 per cent and 332 per cent, respectively, the 
belt from three to four miles from State and Madison streets had in- 
creased in value over 1,000 per cent and the 160 square miles in the 
present city limits that lie over four miles from State and Madison 
had appreciated from $12,000,000 to $187,000,000, a gain of over 1,460 
per cent. The combined effect of suburban railroads with increasing 
train service, the horse-car lines, the new belt of parks and boulevards; 

6 s For detailed sales in the central business district and other sections of the city, 1870- 
73, see Chamberlin, op. cit. t pp. 298-306, and Figs. 71 and 73. 
66 Chicago Tribune, May 31, 1878. 



MAP OF CHICAGO 

-SHOWING- 

LAND VALUES -1 873 

AVERAGE VALUES FOR EACH SQUARE MILE IN DOLLARS PER ACRE 
SOURCE: ACTUAL SALES 



-40^500^ 675 i 875 
2o"bp>200O,i 1000 I 



300 ~IDOQ. ! 1200 ; 2000 



50C(2500uHir i 6000; ^000; 

j.. yjjL, 

1200 25001 3500 1-1000 



i 600 ; lOOO^OOOl 2000J 4000J 6000; 20,000 \\ 
.L J-.-rli ; ', L 1 1 \4rtnni7 

!/ I i I5.0OO 1 \i\ 



i-*00 ; 1000 j 1000 ! 2000 j 3000; 30001 "F- 



200 ! 300 : 400 : eoo i aoo : 2000: 3000 1 3000 i i | sooo 

! : ! lojooo: ,, 



soo ; r^n i 'oooj ISOOJBOOO; sqpoj^L^ 



300 ! 500 I 500. -i 1000 ; 1500 1 250'o; 2000 ; <^Q 



300 j 5tfO j 500 j 1000 ! 1500 i 2000 j 1500 i 1500 



V"i ir 

ioobj i50p : 1500! tooo ! 



1200 I \I200J 600; 600 / 600 
' 



---- j. ]*r > j J . r. 

8 n ! 1200 '^-'l200 ! 600 ; 50Q 

600 ; 500 ; 500 ; 50o 
i 4 -V 




FIG. 21 



MAP OF CHICAGO 



VALUES -1870 TO 1873 
INDICATED &Y SALES OF ACRE TRACTS 



LEGEND 

LOCATION AND EXTENT OF AREAS SOLD. 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 
SQUARE MILE SECTION 




! l 



FIG. 22 



ONE HUNDRED YEARS OF LAND VALUES 



the fire limits prohibiting wooden buildings near the business center; 
.the lower tax and assessment rates in the suburbs; the removal of in- 
dustries and carshops to the outer edges of the city; the fear of another 
great fire; and the desire to escape the noise and odors of streets lacking 
pavements and sewers had started a heavy migration to the land on 
the fringe of old settlements and had stimulated the imagination of 
land-buyers as to the possibilities of even greater migration in the fu- 
ture. Whereas in the first boom of 1836 land values in the first mile 
from State and Madison streets had represented 56 per cent and in the 
second boom of 1856 40 per cent, they now represented only 22 per cent 
of the total land value in the present city limits of Chicago ; while the 

TABLE III 

CHICAGO LAND VALUES BY MILE ZONES FROM STATE AND 

MADISON STREETS, 1836-79 

(In Thousands of Dollars) 



Zone in Miles 


1836 


1843 


1856 


1861 


1873 


1879 


I 


$e QOO 


$ 810 


$f I OOO 


$25 ooo 


$125 ooo 


$ 60 ooo 


12 


2,OOO 


200 


77 OOO 


18 ooo 


IO7 OOO 


60 ooo 


2 3 


816 


80 


1 8 soo 


IO OOO 


8 1 700 


40 ooo 


34 


416 


40 


7,000 


3 ooo 


78 600 


30 ooo 


Over 4 


i ,400 


280 


12,000 


4,000 


187 ooo 


CQ OOO 
















Total 


$10,532 


$1,410 


$125,500 


$60,000 


$575,300 


$240,000 



value of the 160 square miles of the present city that was more than 
four miles from State and Madison increased from 7 per cent of the 
total in 1836 and 10 per cent of the total in 1856 to 33 per cent of the 
total in 1873. The land within the city limits of 1873 was then valued 
at $36i,ooo,ooo, 67 and that between those limits and the present city 
limits at $214,000,000. 

6 7 Colbert (dp. cit., p. 137) estimates that in 1871 the assessed values of land in Chicago 
were 60 per cent of true values; the following is his estimate of the total land values in 
1871 and the writer's estimate for 1873: 



Location 


Assessed Value 
Land Only, 1871 


Cash Value, 
1871 


Estimated Value, 
1873 


South division 
West division 


$ 82,609,600 


$137,683,000 


$161,500,000 


North division 


28,357,280 














Total 




$204 886 ooo 


$ 6 








' ' 



In addition to the amount included in Colbert's figures, there was tax-exempt property in- 
cluding land, buildings, and personal property which Colbert estimated had a cash value of 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 117 

E. THE PANIC OF 1873 AND THE SUBSEQUENT DEPRESSION 

The last phase of the boom in the spring of 1873 was a continuation 
of the rapid rise in land values near the South and West Side parks, in 
Washington Heights and South Chicago. The selling prices of land 
in the built-up sections of the city remained practically stationary. In 
May the market grew dull even in the outlying areas. There was yet no 
fear of a collapse of the structure of land values that had been reared 
so high during the last ten years. It was believed that a deflation could 
be caused only by a catastrophe, and in this category were placed such 
events as the panic of 1857, the Civil War, and the great fire. 

The course of events then regarded as normal had, however, pro- 
duced a dangerous situation for speculative landholders by the summer 
of 1873. Municipal extravagance, excessive outlays on magnificent 
business blocks built at high cost on borrowed money, lavish expendi- 
tures on street improvements in sections where they were not required, 
overexpanded subdivision activity, and a disproportionately large 
amount of real estate purchases on small down payments all these 
had been the result of the extreme optimism of the times. Looking 
back at the situation "in the cold, gray dawn of the morning after," it 
was discovered that in city affairs there had been "lavish expenditures, 
downright thievery on a mammoth scale, and the creation of sinecures 
for political abettors," 68 and that "the city [had] acceded to the demand 
of every real estate speculator who asked for improvements." 69 The 
value of real estate had, in many instances, been raised on the strength 
of projected improvements far more than was justified. 

The practice had been [for] the owner to add immediately to his price all that 
the entire good of the enterprise can bring at its completion. Cases are numerous 
in this county where thousands of per cent have been added to the prices of lots 
as soon as some great enterprise was authorized by law.? 

Reviewing the Chicago real estate market of 1871 to 1873 from the 
vantage ground of three years afterward, the editor of the Real Estate 
and Building Journal thus described its various moods and tendencies: 



$52,951,000 and which he did not include in the foregoing estimate, but the land element of 
which is included in the writer's estimate. There was also a very marked rise in the value 
of land on the outer edge of the city within the limits of the city of 1873 on the South and 
West sides from 1871 to 1873. 

68 Real Estate and Building Journal, August, 5, 1876. 

* Ibid., April i, 1876. T Ibid., July 22, 1876. 



n8 ONE HUNDRED YEARS OF LAND VALUES 

When after the fire everybody was anxious to take advantage of the impover- 
ished condition of the property owners and buy out the ruins of their fortune at a 
sacrifice, it was very easy to find buyers. The market naturally took on a feverish 
phase, its pulse beat hot and quick and sales of $2,000,000 a week and over were not 
exceptional. The great demand almost immediately sent values kiting upwards, 
and ere two years had passed business lots were bringing twice, thrice, and, in some 
cases, four times as much as in the date of the city's destruction. Every kind of 
property, city and suburban, felt the influence of this abnormal inquiry, and fol- 
lowed in a more modest rate, the wake of business property values. Adventurers 
flocked into the city, laid out supposititious plats and sold to the people who were 
not too particular to inquire into titles in their anxiety to get hold of lots, blocks 
or acres in this favored section. Honest men, seeing nothing but a golden future 
before them rapid sales and handsome profits bought heavy interests, paying 
perhaps one-tenth, perhaps more, of the purchase money down and giving trust 
deeds for the remainder. Builders were, if possible, even more sanguine and put up 
magnificent business palaces, running in debt for the site and material to a depth 
that in the flushest times would hopelessly sink them in adversity and bankruptcy. 
Subdivisions were laid out every day, new railroads projected and partially carried 
through and lots went faster than the deeds could be made out. The city authori- 
ties found no difficulty in obtaining money to inaugurate improvements on streets 
and alleys amounting to millions. It made its levies to meet them and for a year or 
two collected taxes without difficulty. 71 

Such a calm analysis of the land market could not have been made in 
1873 when the people were still laboring under the excitement of the 
boom. In the summer of 1873, the upward movement in land values 
was nevertheless being halted by a falling-off in the cash resources of 
prospective buyers. The wages of bricklayers, carpenters, and other 
skilled build ing- trade workers had fallen from the five-dollars- to ten- 
dollars-a-day level of 1872 to three dollars a day, and these laborers 
who had been heavy purchasers of cheap lots in 1872 no longer had a 
surplus for such investments. The rents of business blocks in parts of 
the downtown area had declined and business profits were receding. 
New surplus funds having dwindled, and lot purchasers finding it diffi- 
cult to dispose of their earlier investments and being called upon to 
meet second payments upon the purchases already made as well as 
taxes, there was a waning in the purchasing power that was necessary 
for an expanding price level. Moreover, as soon as land values halted 
in their advance, the desire to purchase land fell off sharply, for nothing 
so quickly stops an upturn as the belief that a commodity can be 
bought next month or next year at the same price. 

7* Ibid., May 13, 1876. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 119 

After a lull lasting from May to September, 1873, the landholders, 
who were waiting for an expected revival of the market in the autumn, 
were startled by the announcement on September 18 of the failure of 
Jay Cooke and Company in New York. In quick succession thereafter 
came the crash on the stock market, the series of bank suspensions, and 
the commercial failures that characterized the panic of 1873. There 
was no sudden deflation of Chicago land values, however. Some land- 
owners, hard pressed for cash to meet commercial obligations, found a 
ready market for their lots on the fashionable avenues at a 20 per cent 
reduction from the peak prices of 1873. They were aided in this policy 
by the abundance of loan funds offered to renew mortgages. During 
1874, 16,526 real estate loans for a total of $124,000,000 were negoti- 
ated to enable landowners to carry their obligations. 72 Land values 
had shrunk on the average 20 per cent by the spring of 1874, but 
property could be sold for cash by those who were willing to make this 
reduction. 

The forces of depression were now slowly grinding away. Between 
1873 and 1874 the number of workers employed in Chicago manufac- 
turing plants dropped from 60,000 to 52,000 and the wages paid them 
from $32,000,000 to $26,5oo,ooo. 73 The annual value of new construc- 
tion, after the rush of rebuilding the burnt area, had in the same inter- 
val dropped from $25,500,000 to $5,785,000. The wages of common 
labor had been reduced from $2.00 to $1.00 and even less a day. There 
were thousands of unemployed men being supported by public charity. 
House and business rents were declining. While there was a reduction 
of one- third in the cost of new construction in 1874 as compared with 
1872, the effect was to cause a downward revision in the reproduction 
cost of all buildings previously erected. 

Chicago property owners in 1875 were faced with a situation in which 
their gross incomes from rents were drastically declining, while their 
expenses in the form of fixed interest charges at the rate of 8-10 per 
cent per annum and of undiminished tax burdens remained the same. 
The value of their buildings had fallen as much as 40 per cent because 
of the lower cost of construction. 75 To escape the resulting loss, they 
sought to trade their mortgaged property for farms or other property. 

v Chicago Tribune, January 6, 1878. 

73 Industrial Chicago, III, 514. 74 Ibid. t I, 149. 

75 Real Estate and Building Journal, July i, 1876. 



120 ONE HUNDRED YEARS OF LAND VALUES 

"During the first quarter of 1875 four-fifths of the sales made were 
[exchanges] for other property with little if any cash. Nine months ex- 
hausted this sort of dicker." 76 

The cash buyers of 1874 had disappeared from the market. The 
owners of vacant lots, in order to secure an income by any possible 
means, in certain cases allowed builders to place mortgages on their 
lots to finance buildings. This frequently resulted in the loss of their 
entire equity. 77 The majority of the property owners could do nothing 
to shift their burden, and they waited with growing anxiety for the 
return of an active market like that of 1872. 

Instead of improving conditions, the attrition of the forces of de- 
pression continued to wear down the reserve power of the landowners. 
The number of transfers by deed declined from 64,602 in 1874 to 57,638 
in 1875, 50,884 in 1876, and 47,860 in i877. 78 As the depression con- 
tinued, more and more of these transfers represented exchanges, fore- 
closures, or nominal conveyances, so that the number of actual cash 
sales dropped to a far greater extent than these figures indicate. New 
loans or renewals of old loans became more difficult to secure, the total 
advances on new mortgages declining from $124,000,000 in 1874 to 
$89,000,000 in 1875 and $30,000,000 in 1876. Foreclosures had corre- 
spondingly increased from 1,069 i n 1874 to 1,166 in 1875, 1,284 in 1876, 
and 1,803 in 1877. 79 Rents had declined fully 20 per cent on houses and 
offices by 1876, and by 1877 average rents were 30 per cent lower than 
in i873. 8 Houses renting for over $100 a month were a drug on the 
market. 

In 1876 Chicago land values were in a chaotic state, the prices in the 
same block varying according to the financial condition of the owner. 

Prices vary very much. If he [i.e., a prospective buyer] would select such a 
block, lot or tract as he wishes, and go to the owner and ask his price, he would be 
answered according to the financial condition of the owner. If he had bought and 
paid for his property, the advances will all have to come from his side. If, on the 
contrary, the owner or holder rather has bought in times of flush confidence and 
made a small payment taking a large risk and finds himself unable to meet it, he 
will instantly give him the lowest price he can save himself with, and if buyers do 
not give that, he will let it go under the trustee's hammer. 81 

7 Ibid., April 8, 1878. 78 Mid., January 6, 1878. 

77 Chicago Tribune, November 19, 1876. 79 ibid. 

80 Real Estate and Building Journal, March 18, 1876. 

81 Ibid., August 19, 1876. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 121 

Those who were not forced to sell their holdings did not offer them on the 
market, as they could not realize what they had paid. 

Nearly all [holders of acre property] are holding it for a rise in prices and have 
no intention of selling it for two years at least. Never has there been so little land 
for sale in this city and county as now. 82 

There is no prospect of uniformity in the values of business property for the 
reason that much of it has been purchased to hold for a term of years as an interest- 
yielding investment and it is not for sale at any such price as was last paid for it. 
One cannot point to a business block, lot or residence sold at a sacrifice in Chicago 
that was not so heavily encumbered as to make it necessary to dispose of it. Rents 
in good localities are not so low as not to pay a reasonable interest besides the taxes 
on the property, and in other places less eligible where they have fallen too low 
for that, the owners comfort themselves with the belief that though they are losing 
something, they will stick to their property and make it up in the future advance. 8 * 

In a land market where some were holding their property at the peak 
prices of 1873, and others were willing to accept anything above the 
mortgage, while there were few sales at any price, the current observers 
of land values confessed the need of some more definite standard of 
value. 

At this time when values are at the lowest ebb, when one can scarcely name a 
cash price on property, it would be a capital move for a congress of our most ex- 
perienced and trusted men to convene and arrange a schedule of prices upon prop- 
erty in the city and county, gauging them upon the actual advantages possessed 
by different tracts. The schedule could be accepted or not by owners, yet it would 
have a moral influence upon home and outside capital beyond anything else that 
could be devised. It is doubtful if this could be done. Such is the jealousy of pro- 
prietors, and so confirmed the habit of painting every interest in roseate colors, that 
anything like an amicable agreement on values would perhaps be improbable. But 
whether definite conclusions could or could not be reached, the discussion would 
throw light upon the market and enable investors to act more understandingly 
than is possible under the widely differing representations their inquiry evolves 
from owners and agents now. 8 * 

Notwithstanding doubts as to the exact range of prices, there was 
no question in 1876 but that land values had been steadily declining 
since 1873, starting first with the depreciation in buildings. 

Thus in improved business, the price went down, not at first upon the lots but 
upon the building. Added to this, heavy incumbrances matured and parties were 
compelled to sell at any price. Eventually this affected other blocks, not similarly 
encumbered, and all classes of improved property declined in sympathy. 85 

82 Ibid., June 3, 1876. 8 < Ibid., July 22, 1876. 

83 Ibid., August 19, 1876. 8 Ibid., July i, 1876. 



122 ONE HUNDRED YEARS OF LAND VALUES 

The decline had also been accentuated by the burden of taxes for 
improvements constructed far in advance of their need. 

There are miles of gas mains, sewers and water mains, sidewalks and curbing 
lying along vacant territory which will not need them for years. In many sections 
needed improvements were left unfinished by the sudden crippling of the money 
market. 86 

The painfully slow process by which the land- value peaks of 1872 
were worn down is thus described: 

The land market is at the present tune [July, 1876] in a lower condition, as re- 
gards transfers, prices and interest felt in it, than it has been in the history of the 
city since it became a metropolis. The record of sales is extremely light and the 
inquiry dull in the extreme. Prices have been steadily falling from the fall of 1873 
to the just ended spring, and investments were greatly discouraged. Owners and 
dealers have earnestly watched the decline, unwilling to do anything until it 
ceased and this very disposition, by almost destroying the demand, accelerated the 
downfall of prices and made men more and more fearful of buying. If the decline 
had been a sudden spasm, lasting but a few months and had then suddenly stopped, 
there would have been good ground for mistrusting the situation and holding back 
money from real property. Or if it had been precipitate as in some eastern cities 
and in San Francisco after the bursting of the great mining bubbles, there would 
then be ample cause for serious alarm and for directing one's attention to other 
channels for the use of money. But the fall in values had been gradual. The de- 
cline in values commenced, continued and ended slowly. Deliberation has marked 
every circumstance affecting the market. There was no wild scare, no rushing, no 
jostling. The market, under the weight of a more crushing panic than the thirties, 
yielded inch by inch, under the influence of maturing notes, national turpitude on 
the financial problem, local corruption and malappropriation of the public funds, 
the discouraging of the purchasing of homes by the lowering of rents and various 
other adverse influences. It was stunned by the shock of tumbling fortunes and 
exploding schemes. Plans long maturing were at once rendered inoperative and 
dealers and owners were confused, scarcely knowing which way to turn to save 
themselves from a ruin that seemed impending over all. 87 

The effect of this declining land market on the individuals involved in 
it was pathetic. 

In the entire history of land dealing there has not been a reverse which has lasted 
so long or caused such depreciation as the one under which the market has labored 
for three years years strewn with the wrecks of fortunes and the destruction of 
hopes. Indeed it is by no means certain that human minds and lives have not been 
destroyed under the burden of disappointed expectations and the obloquy which 
has been cast upon reputations previously fair and bright through the inability 
of persons to meet their promises and carry out their contracts. When a man has 

86 Ibid., April i, 1876. "7 Ibid., July 8, 1876. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 123 

worked and studied for years in gathering a sum together for investment in some- 
thing which he believes to be sure to give him respite from toil and enable him to 
live at ease, if he makes a mistake in judgment and places his funds in some non- 
productive property, where because of the panic they must be locked up as com- 
pletely as if behind impregnable locks so that he cannot use them even for life's 
necessity, when after waiting patiently and hopefully in vain for better days until 
he is pressed by his creditors to the wall, when he finds all these expectations so 
long in being realized, it is not strange if he grows disheartened, hopeless and 
gloomy, a state of mind favorable to even greater miseries. Some of our dealers 
have passed away. No one knows how much the reverses of fortune and loss of 
business may have contributed to the end. 88 

Sad as the year 1876 was to the holders of incumbered property, the 
year 1877 was to fill their cup of misery to the brim. The bank failures 
in Chicago that had followed in the wake of the panic of 1873 culminat- 
ed in 1877 with the failure of the largest savings banks in the city the 
Columbian and the Bee Hive making a total of twenty-one bank fail- 
ures in four years. Serious labor riots broke out all over the United 
States, and on July 5, 1877, a pitched battle was fought between the 
police and a great mob at the Halsted Street bridge over the south 
branch in which twenty were killed and seventy injured. In this pe- 
riod, when capitalists were frightened by these industrial disturbances, 
twelve thousand loans for a total of $50,000,000 that had been made by 
local property owners to finance the rebuilding after the fire fell due. 89 
Scant capital was available for refunding these maturing obligations or 
for buying property at any price. Wealthy men were hoarding their 
money because currency was constantly appreciating in terms of gold, 
while lands and commodities had been constantly declining in terms of 
currency. The holders of property who could not pay off their mort- 
gages were given short shift. 90 In most cases no one attended these 
sales but the holder of the mortgage. He bid in the property at his own 
price, sometimes as low as one-fourth of the amount of the mortgage, 
and secured a deficiency judgment for the balance. 91 The once opulent 

88 Ibid., December 30, 1876. 

*9 Chicago Tribune, January 28, 1877. 

90 The period of redemption allowed by the laws of Illinois was one year for the mortgagor 
and an additional three months for creditors, which is the same as at present, but the mort- 
gagees who were residents of other states were allowed to foreclose in the United States 
district court, which then allowed the mortgagors only one hundred days after the sale in 
which to redeem. 

* Chicago Tribune, July 28, 1878. 



124 ONE HUNDRED YEARS OF LAND VALUES 

real estate operators in many cases thus not only lost their land but 
were forced to go into bankruptcy to avoid paying personal judgments 
on the original purchase price of the land. The fees of courts and 
lawyers exacted a heavy toll even from the winning side, and these 
charges, in addition to taxes and special assessments with their penal- 
ties of 100 per cent a year for late payment, were added to the costs of 
holding land. Of the long list of men who were thus reduced from afflu- 
ence to poverty when "Fickle Fortune, in contrast to her previous 
smiling visage, threw aside her mask and showed an ugly countenance," 
may be mentioned Samuel H. Walker, reputed to be worth $15,000,000 
in 1873, who had lost all his property by 1877. If the best improved 
real estate in the central business district of Chicago was thus fore- 
closed, the fate of vacant land can be imagined. "It first grew dull, then 
stagnant and then unsaleable." In 1877 the bottom of the real estate 
market was at last reached. In the wreckage of some real estate for- 
tunes, shrewd capitalists with large cash resources found an opportu- 
nity to lay the foundations for huge estates in the future. As in the case 
of the aftermath of the booms of 1836 and 1856, Chicago land values 
were not thoroughly deflated until four years after the first shock of the 
panic. In the absence of short selling in real estate and the lack of any 
organized market for land in the early period of the depression, the 
landholders kept their land until the constant attrition of interest 
charges, taxes, and penalties or the inability to renew mortgages 
brought foreclosure proceedings that squeezed out the equities above 
the mortgage. Four or five years seemed to be required to complete 
this painful process, and it was not until it was over that a definite 
market for land was established at a lower level of values. 

In 1877 and 1878 it had to be mournfully admitted that a quick 
return to the level of land values prevailing in 1873 was not only not to 
be expected, but that the values obtaining at that time were the result 
of a hallucination or a speculative disease. As the real estate editor of 
the Chicago Tribune said in 1878: 

The wills of the wisp [suburban lots] that lured speculators to their financial 
death in the happy days when there were no panics are extinguished. The water 
privileges that used to be spoken of with admiration almost too deep for words are 
now candidly alluded to as swamp lots. The outlying districts that were so hand- 
somely mapped and platted for exhibition in the agents' offices are resignedly if 
not cheerfully given over to the market gardener and the dairyman.' 3 

* Ibid., April 14, 1878. 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 125 

When these lines were published, the corners of Sixty- third and 
Halsted 93 and Forty-seventh and Ashland were selling for $8.00 and 
$12 a front foot, 94 land near Twenty-second and Ridgeland in Cicero 95 
and One Hundred and Eleventh and Michigan was offered for $ioo 96 an 
acre, and Marshall Field was about to buy the present campus of the 
University of Chicago for $5.00 a front foot. 97 

F. A SURVEY AT THE BOTTOM IN 1877-79 

The bottom in land values in the Chicago area for this period was 
reached in 1877 when there was virtually no market at all, but it is 
necessary to resort to the sales of 1878 and 1879 and the evidence as 
to the extent of the decline. 

The total land value of the 211 square miles in the present city limits 
of Chicago declined on the average over 50 per cent from a total of 
$575,000,000 in 1873 to less than $250,000,000 in i877. 98 The decline 
was least on North Dearborn Street; on State Street near Madison; on 
West Madison Street, which continued to grow during the depression 
until it was solidly built up to Ashland Avenue; on South Michigan 
Avenue, which was developing fast south of Thirty-second Street with 
the growth of the Stock Yards; in the Stock Yards district; on Wabash 
Avenue north of Monroe Street; and in the medium-grade residential 
property that was close to the center of the city where the drop varied 
from 33 to 50 per cent. 

The fall in land values was approximately 50 per cent on the fashion- 
able West Side and South Side residential streets except on South Park 

93 Ibid., May 23, 1879. A deed recorded October 5, 1878, showed a consideration of $800 
for the northwest corner of Sixty-third and Halsted streets, 75 by 139 feet. 

94 Ibid., November 21, 1878. The southeast corner of Forty-seventh and Ashland, 47 by 
121, sold for $600. 

^Ibid., November 12, 1878. 

96 Ibid., Octobers, 1879. 

97 Ibid., August 18, 1879. Marshall Field paid $79,166.67 for 63^ acres between Wood- 
lawn and Egandale (Ellis), Fifty-fifth and Fifty-ninth streets. 

9* Ibid., July 28, 1878: "The prices realized are generally half, often a third, perhaps 
even less than one-fourth those ruling a few years ago." 

"Causes of General Depression," Labor and Business (H.R., 46th Cong., 2d sess.; 
Washington, 1879), Misc. Doc. 5: "1873, Chicago": "CHAIRMAN: What is the average 
shrinkage in the value of real estate in this city comparing the present time with an average 
of five years back? MR. CHARLES RANDOLPH [secretary of the Board of Trade] : It would 
be but a guess on my part, but I should say that the shrinkage between 1873 an d today 
[1879] would be from forty to fifty per cent." 



MAP OF CHICAGO 

-SHOWING - 



HORSE CAR LINES IN I860 

NOTD STEAM DUMMIES OPERATED ON THE COTT- 
'" AGE GROVE LINE SOUTH OF 39 STREET AND ON THE 

BROADWAY LINE NORTH OF OIVERSEY BOULEVARD 



LEGEND 

LINES BUILT FROM 1859 TO 1865 
LINES BUILT FROM 1870 TO 1678 




FIG. 23 



A PANIC, A CIVIL WAR, AND A GREAT FIRE 127 

Avenue where it exceeded 75 per cent, and the deflation was greatest 
on Wabash and Michigan avenues south of Jackson, on land near the 
parks and in all suburban and outlying lands where the decline varied 
from 75 to 90 per cent. For example, Michigan Avenue lots near Jack- 
son sold for $200 a foot compared with $1,000 a foot in 1873, State Street 
south of Jackson at $500 instead of $1,250 a foot, fashionable residence 
lots from $75 to $200 a foot instead of from $250 to $500 a foot, acres 
at Forty-seventh and Drexel at $7,500 instead of $20,000 an acre, a 
tract at Twenty-fifth and State Street at $5,000 instead of $15,000 an 
acre, land at Sixty-third and Racine at $500 instead of $2,000 an acre, 
Forty-eighth and Champlain $2,350 an acre compared with $10,000 
an acre, and tracts in Ravenswood at $375 instead of $3,000 an acre. 
The silver lining. It was some consolation to Chicago that the de- 
cline in land values in the Central Park district in New York was even 
greater than the fall of land values in Chicago," for the easterners could 
not point to Chicago as a horrible example of western boom methods 
when they were in the same situation. Of far greater significance was 
the fall in construction costs, the decline in the interest rate on the best 
real estate security in Chicago from 8 per cent in 1873 to 6 per cent in 
i878, IO which favored a constant annual accretion of thousands of 
dwellings built at low cost, the number being 875 in 1875, 1,636 in 
1876, and 2,698 in 1877 a total of twenty-five miles of frontage for the 
three years. The packing industry was growing, with Armour and 
Swift beginning to send chilled beef East in refrigerator cars, while 
other lines of manufacturing and the wholesale trades were maintaining 
their volume of business. Representatives of eastern firms were coming 
to Chicago to establish branch houses. Population was about to catch 
up with the supply of houses, the resumption of specie payments was 
not far away, and the motive for hoarding money was disappearing. 
The telephone had been invented and Edison was about to demonstrate 
his electric light. The first apartments had appeared in Chicago. 
While many new factors were thus in the formative stage, the street-car 
lines on Madison Street, Cottage Grove Avenue, and Milwaukee Ave- 
nue were being extended from 1875 to 1877 to the new belt of parks 
as Figure 23 shows. 

99 Chicago Tribune, October 27, 1876. 

100 Ibid., November 17, 1878. 



CHAPTER IV 

THE LAND BOOM OF THE FIRST SKYSCRAPERS 
AND THE FIRST WORLD'S FAIR, 1878-98 

A. RECOVERY IN GENERAL BUSINESS CONDITIONS, 1878-84 

The prelude to the recovery of Chicago land values from the extreme 
depression of 1877 was the beginning of improvement in general busi- 
ness conditions throughout the United States. The prices of raw mate- 
rials, the wages of labor, the rents of houses and stores, and the interest 
rates for capital advances having been reduced to an extremely low 
level by 1877, it became a favorable time to expand manufacturing 
operations to replenish depleted stocks. The effect of good crops in 
1878 and the confidence engendered by the resumption of specie pay- 
ments in 1879 gave the new upward movement its initial impetus. 
Rising prices and profits margins speeded up production, increased em- 
ployment, and furnished the funds for a brief era of speculation that 
culminated in 1883. From 1879 to 1883 the railroad mileage of the 
country increased 50 per cent and the resulting demand for steel rails 
gave a great impetus to the iron industry. The enlarged demand for 
labor for railroad construction and for heavy work in factories and 
mills induced a fresh volume of adult immigrants from abroad. Stimu- 
lated by the activity of the agents of steamship companies and fre- 
quently by the prepayment of the $22 passage money by friends in 
America, the tide of this immigration increased in numbers from 130,- 
502 in 1877 to 250,565 in 1879, 593,703 in 1880, 720,045 in 1881, and 
730,349 in 1882, a new peak. 1 

The effect on the trade, manufactures, and railroads of Chicago. 
Chicago was at a focal point that would benefit to an unusual degree 
from larger western crops, increased railroad building, and an improved 
demand for manufactured products. In the three years from 1880 to 
1882, inclusive, seven new trunk-line railroads entered Chicago. 2 In the 
four years from 1878 to 1881, inclusive, Chicago bank clearings in- 

1 Chicago Tribune, April 14, 1883. 

2 P. L. Tan, "Belt Railroads of Chicago" (MS thesis, University of Chicago, 1931). 

128 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 129 



creased from less than $1,000,000,000 to $2, 250,000,000.3 In the five 
years from 1879 to 1883, inclusive, the number employed in Chicago 
manufactures increased from 62,948 to 114,457 an d the wages paid from 
$35,000,000 to $59,ooo,ooo. 4 In the period from 1877 to 1881 the value of 
the wholesale and produce trade of Chicago rose from $387,000,000 to 
$7oo,ooo,ooo. s From 1877 to 1883 the population of Chicago advanced 
from 420,000 to 590,693. A study of Table IV, giving the annual trade 
indices just referred to, shows a particularly rapid increase in bank 
clearings and total trade from 1879 to 1881 and a slow gain thereafter 
to 1883. 

TABLE IV 

THE GROWTH OF CHICAGO, 1877-83, AS INDICATED BY BANK 

CLEARINGS, NUMBER EMPLOYED IN MANUFACTURES, 

TOTAL TRADE, AND POPULATION 







Value Manu- 






Year 


Bank 
Clearings 
(Millions of 
Dollars) 


factures, 
Wholesale and 
Produce Trade 
(Millions of 


No. Employed 
in Manu- 
factures 


Population 






Dollars) 






1877 


$1,045 


$ 595 


58,213 


420,000 


1878 


967 


6^O 


67,504 


436,731 


1870 


I 2*8 


?6d 


62 04.8 


4.6 c ooo 


1880 


I 726 


QOO 


80 , 07 < 


tJO3, 2o8 


1881 . . 


2. 240 


i ,oi<; 


87 ,000 


< 30,000 


1882 


2,367 


1,045 


96,654 


560,000 


1883 


2,526 


1,050 


114,457 


590,693 



The general effect of improved business conditions upon Chicago land 
values. The effect of the increased volume of trade and manufactures 
in a market in which selling prices were rising faster than cost prices was 
greatly to increase the profits of business men. A fund of new capital 
was thereby coming into existence that was available for investment. 6 
To this freshly created surplus there was added by 1879 a large amount 
of hoarded wealth. Prior to the resumption of specie payments, the 
steady rise in the value of currency in terms of gold and other commodi- 

3 Chicago Tribune, January i, 1884. 

4 Industrial Chicago, III, 194. s Ibid. 

6 Bank clearings from a typewritten statement of the Chicago Clearing House Associa- 
tion; number employed in manufactures from ibid.; the value of manufactures, wholesale 
and produce trade, from the annual reviews of the Chicago Tribune (1878-84), in the issues 
of January i of the years cited. 



130 ONE HUNDRED YEARS OF LAND VALUES 

ties had tempted many rich men to lock their money in strong boxes. 
As soon as currency reached a parity with gold and general prices be- 
gan to rise, these funds came from their hiding places. Even during the 
hard times of 1876 and 1877 the Chicago Stock Yards magnates and the 
Chicago capitalists who had invested in Leadville mines had accumu- 
lated fortunes. With the return of a more prosperous era after 1879, 
however, a large number of laborers, employed at full time, began to 
accumulate small amounts of capital. Thus in all ranks of society 
surplus funds were accumulating or were being made available for in- 
vestment. 

To attract this surplus, Chicago real estate was in an advantageous 
position. As compared with other forms of investment in 1879 it 
seemed to offer the highest rate of return compatible with safety. From 
1872 to 1880, the net yield of high-grade bonds had fallen from 6^ to 4 
per cent per annum. 7 In the same interval the rate of interest on the 
best real estate mortgages in Chicago had declined from 8 to 6 per cent 
per annum. The collapse of the Leadville mining boom was over and 
mining stocks had lost their popularity when many of them became 
worthless. The failure of practically all the savings banks in Chicago by 
1877 had caused the laborers to avoid them as places for depositing 
their savings. 

On the other hand, Chicago real estate in the central business dis- 
trict presented the prospect of increasing rather than declining net in- 
come, and of ultimate safety of principal, rather than the final loss of all 
that was invested. Rents of Chicago improved property ceased their 
downward movement in 1878, and, as the growth of population and the 
spreading-out into new quarters of families who had boarded out dur- 
ing the depression proceeded for a time faster than new construction, 
rents of the houses in the $15- to $4o-a-month class advanced 25 per 
cent in 1879. The advance in house rents and in store rents, particular- 
ly on State and South Water streets, continued until in 1882 average 
rents were 75 per cent higher than in 1878. Meanwhile, the great mu- 
nicipal extravagance that had prevailed prior to 1873 had been sharply 
checked, with the result that the annual tax bill began to decline after 

7 Yield on high-grade rail bonds as computed by the National Bureau of Economic 
Research, cited in Philip W. Kniskern, Real Estate Appraisal and Valuation (1933), p. 
407. For real estate loan rate in Chicago, see Fig. 80, and Chicago Tribune, December 
28, 1879. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 131 

1874. Delinquent taxes had fallen from $500,399, or nearly 25 per cent 
of the total tax bill, in 1877 to $28,866, or less than 2 per cent of the 
total tax bill, in 1879. Suburban houses that had been empty for five 
years were being occupied, heavy masses of brick and masonry were be- 
ing pushed up to nine stories in one section of the downtown area, and 
a more intensive and more profitable type of residential building, the 
apartment, was spreading rapidly. 

Thus at this time when the return from improved Chicago real estate 
was about to show a marked increase, the market value of real estate 
had been reduced to the lowest point in years. Foreclosure proceedings 
affecting a considerable proportion of the property in the central busi- 
ness district of Chicago had run their course by 1878 and 1879. Before 
this process of judicial liquidation had been completed, the transfer of 
the properties in litigation was very difficult and cumbersome. In 
addition to the title-holder's equity, there were mortgages due or soon 
to become due which anyone buying the property had to be prepared 
to meet in full. Now that the former owner's equity was wiped out and 
the title vested in the holder of the mortgage, the property was free and 
clear of all incumbrances. When insurance companies owned such 
property they were ready to sell it for the amount of the mortgage plus 
interest and expenses. Thus capitalists with surplus funds for invest- 
ments found bargains in real estate that would net them from 7 to 15 
per cent on their investments even at the low rentals of 1878 and 1879. 
This high return was entirely consistent with safety, for the insurance 
companies which had loaned their money on Chicago property in the 
boom of 1872 finally reported that they had received all their money 
back, with interest, from the proceeds of foreclosure sales. 

Thus as soon as there were surplus funds available for investment, 
bargains in Chicago real estate were present to attract them. In addi- 
tion to the demand for income-yielding property, there arose from 
several sources demands for vacant ground for actual use. Business 
men who had reaped profits in the rise of stocks or commodities desired 
palatial homes which required the purchase of boulevard lots. Like- 
wise, mechanics and laborers, whose recent experiences led them to 
distrust savings banks, invested part of their savings in homesites. 
Finally, the growth of railroads and manufacturing establishments 
gave rise to a demand for ground for rights of way and factory build- 
ings. 



i 3 2 ONE HUNDRED YEARS OF LAND VALUES 

The theory as to how improved business conditions finally affected 
real estate was thus stated in 1881 by E. H. Ludlow, who was at that 
time the oldest real estate broker in New York City: 

Good crops and business activity call for larger stores and warehouses and the 
rise in rents of such buildings increases their value. Then the men engaged in busi- 
ness want, as they make money, to live better, to move from small houses in down- 
town streets into their own houses in more fashionable locations. This makes a de- 
mand first for small up-town residences, then for larger ones, then for palaces. This 
starts the builders and their demand for vacant land increases the price for vacant 
land where the street improvements are completed, and this finally starts the value 
of land not yet ready for building and speculation follows. 

The flow of the surplus profits of industry and trade into Chicago 
real estate for actual use and as the most attractive form of investment 
of funds was the first phase in the recovery of Chicago land values after 
the depression of 1877. The purchase and removal from the market of 
the most attractive offerings of central business property had the effect 
of raising land values to the level of the lowest asking prices of the 
owners who had not been forced to sell. After the chaotic and confused 
conditions of 1877, in which there was hardly a market for real estate 
at any price, there developed a cash market for "bargains" from 1878 to 
1880. After the bargains resulting from foreclosure sales had been dis- 
posed of, a market developed from 1881 to 1883 with a narrower range 
between bid and asked prices and fewer discrepancies between prop- 
erties in similar income classes or in similar locations. 

B. THE SPECIFIC METHODS OF RECOVERY OF CHICAGO LAND 
VALUES, 1878 TO 1883 

The general forces already discussed by no means diffused them- 
selves evenly over the Chicago land area, but their influence was con- 
centrated on certain spots, producing increases in land values in the 
favored localities and passing by other sections altogether. To discuss 
the specific mode of operation of this recovery in land values it is ac- 
cordingly necessary to skip from point to point and to consider (i) the 
picking-up of bargains in the central business district, (2) the rise in 
values on Michigan Boulevard, (3) the "resurrection" of South 
Chicago, (4) Pullman, (5) the boom in the new Board of Trade quarter, 
and (6) the growth of Hyde Park, Englewood, and the outer edges of 
the North and West sides. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 133 

1. Bargains in the central business district, 1879-80. The purchase 
of land on Michigan Avenue from Jackson Street to Washington 
Street at from $200 to $250 a front foot in 1879, or 75 per cent less than 
the values of 1873, would seem to be no evidence of a recovery in land 
values. Sales made in 1879 at the rate of $333 to $400 a front foot on 
Wabash Avenue from Jackson to Monroe Street, of the corner of State 
and Madison at $1,150 a foot, and of the corner of Adams and Wells at 
$ 2 50 a front foot were lower than any recorded since 1 8 73 . 9 The very fact 
that sales were made, however, is an indication of improvement, as in 
the worst period of the depression in 1877 scarcely any property could 
be sold, so that the worst depths of the depression could not be meas- 
ured. The effect of purchasing and taking from the market the greatest 
bargains was to raise the level of values to the next lowest stratum of 
offers. 

2. The boom on Michigan Boulevard, 1880. The parade of fashion- 
able carriages, the feminine occupants of which were taking the oppor- 
tunity to show off their expensive gowns and jewelry, proceeding slowly 
down the boulevards to the south parks and the Washington Park race 
track, was a marked feature of social life in the eighties. On one summer 
afternoon in 1881, 4,700 carriages moved south on Grand Boulevard. 10 
Consequently when Michigan Avenue was made a boulevard in 1880 
from Jackson Street to Thirty-fifth Street, it became the cynosure of 
all eyes. The Stock Yards magnates, who had prospered even during 
the depression of the seventies, found it a most convenient place to live. 
The bidding for Michigan Boulevard lots for fashionable homesites by 
1 88 1 sent up the front-foot values south of Twenty-sixth Street to 
higher prices than had been reached in the boom of 1873. The corner 
of Twenty-ninth and Michigan Avenue, for instance, which had sold for 
$330 a foot in 1874," and dropped to $200 a foot in 1879," had been bid 
up to $500 a foot in 1 88 1 and $600 a foot in i883, 13 while sales of inside 
frontage from Twenty-second Street to Thirty-seventh Street were 
being made at from $250 to $400 a foot in i88i. 14 

While Michigan Boulevard was thus rising in the social scale, Potter 

8 Chicago Tribune, June 18, 1879. 

9 Ibid., September 28, 1879; October 17, 1879. 

10 Real Estate and Building Journal, May 12, 1883. 

11 Chicago Tribune, December 20, 1874. 

12 Ibid., April 5, 1879. I3 Ibid. '< Ibid. 



i 3 4 ONE HUNDRED YEARS OF LAND VALUES 

Palmer, in 1882, was filling in a frog pond on the North Side and plan- 
ning in 1884 to erect a mansion costing $250,000 on what was soon to 
be known as the Lake Shore Drive. The conversion of Washington 
Street into a boulevard west of Ashland Avenue had doubled its 
value. Prairie Avenue near Eighteenth Street, the home of the great 
financial and social leaders of Chicago, Marshall Field, Philip Armour, 
and George Pullman, still held the hegemony, as land near its $200,- 
ooo mansions reached a new high level of $700 a foot in 1882; but 
its supremacy was already being threatened. 

3. The "resurrection" of South Chicago , 1879-83. The possibilities 
of South Chicago and the Calumet region, first, as a canal and shipping 
center, and, second, as a great railroad and manufacturing center, had 
produced booms in that territory in 1836 and in 1873. Nothing had 
been done in 1836 except to plat a townsite that was later vacated; but 
in the boom of 1873, a harbor and docks had been constructed, the 
Baltimore and Ohio shops erected (1874), and a number of small in- 
dustries and lumber yards had been induced to locate on the Calumet 
River. The revival of railroad-building suddenly gave new life to these 
old plans. The Chicago and Western Indiana railroad (or its corporate 
predecessors) was a short line that succeeded in forcing its way from the 
Indiana state line to Polk and Dearborn streets in Chicago; and this 
new line provided terminal facilities in the central business district for 
four new trunk railroads in the period from 1880 to 1882, namely, the 
Grand Trunk (1880), the Chicago and Eastern Illinois (1881), the 
Chicago, Indiana, and Louisville (1882), and the Erie (1882). The en- 
try of these new lines through the Calumet region, and the entry of 
three other trunk lines, making a total of seven trunk lines from 1880 
to 1882, stimulated plans for a belt-line railroad that would begin at 
East Chicago, Indiana, and circle Chicago. The wealth of transporta- 
tion facilities in South Chicago and its strategic location as a meeting 
place of lake-borne iron ore and railroad-shipped coal from Illinois 
mines induced two large rolling mills to locate in South Chicago in 
1880. In 1 88 1 the Calumet and Chicago Canal and Dock Company, 
which owned 6,000 acres in the South Chicago region, but was unable 
to sell small tracts because of a $2,000,000 blanket mortgage which 
covered its entire holding, succeeded in paying off this mortgage by 
a sale of preferred stock. Its land was then put on the market in what- 
ever sized tracts were desired for actual use. The Chicago Belt Line 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 135 

Company, organized to build a great belt line around Chicago and with 
plans for a manufacturing city, bought the Forsythe tract of 8,000 
acres around the present site of East Chicago for $1,000,000, one- third 
of which was paid down. 15 These schemes naturally had the effect of 
stimulating speculation in acre tracts throughout the Calumet region 
in 1881 and 1882 until some tracts were held as high as $1,000 an acre. 
But the belt-line scheme collapsed and the Forsythes took back their 
tract of land. This put a damper on the option trading and the specula- 
tive fever. A solid and substantial growth nevertheless continued. The 
United States Rolling Stock Company founded the town of Hegewisch 
in 1883. By 1883 the South Chicago region, including Hegewisch and 
Pullman, which had less than 2,000 population in 1880, had, as a result 
of the location of these new industries, a population of 16,000. 

4. Pullman. George Pullman, deciding in 1880 to locate his great 
carworks near Chicago, was followed wherever he went by a crowd of 
brokers and newspaper men, but he threw them off the scent by pub- 
licly inspecting land near Austin, while secretly buying 3,500 acres of 
land near One Hundred and Eleventh Street and Lake Calumet at 
from $75 to $200 an acre. In 1883, after the new works had been built, 
this land had risen in value to from $1,000 to $3,000 an acre. The 
model town of Pullman, with its own gasworks, waterworks, and sew- 
age disposal plant, was then, as it still is, an independent center in the 
Chicago area, being surrounded on all sides by vacant land of lower 
value. 

5. The boom in the new Board of Trade Quarter. The decision of the 
Board of Trade in 1881 to move from the corner of LaSalle and Wash- 
ington streets to a neglected section left vacant since the great fire of 
1871 in the vicinity of Jackson and LaSalle streets had the effect of 
shifting the financial center of Chicago to the new region. From 1881 
to 1883 the value of land on Jackson, Van Buren, Wells, and LaSalle 
streets near the Board of Trade advanced from $200 and $400 a front 
foot to from $1,500 to $2,000 a front foot, and the value of land on some 
of the side streets, like Sherman and Pacific, increased in an even great- 
er ratio, from less than $200 to over $2,000 a front foot. 16 In this new 
quarter the best office buildings in the city were constructed from 1883 

15 Real Estate and Building Journal, August 28, 1881. Where there had not been a single 
house in 1880, there were 1,000 houses and a population of 5,000 in 1882. 

16 Chicago Tribune, July 23, 1881. 



136 ONE HUNDRED YEARS OF LAND VALUES 

to 1885. Among the new buildings, with a total value of $7,000,000, 
were heavy stone and masonry structures nine stories high. One of 
them, the Home Insurance Building at the corner of Adams and 
LaSalle streets, erected in 1885, has lately been pronounced to be the 
first steel skeleton skyscraper, although it did not embrace all the fea- 
tures of such construction. 17 The era of the "skyscraper" had not quite 
arrived by 1885, however, for the tenants avoided the upper stories of 
the new buildings and revolutionary significance of the tall building was 
not yet realized. 

The total increase in the value of land and buildings within half a 
mile from the Board of Trade from 1881 to 1885 was estimated by cur- 
rent observers at from $20,000,000 to $40,000,000. To offset this gain, 
however, there was a temporary decline in the rents and the land values 
of the old quarter at Washington and LaSalle that had been abandoned 
by the Board of Trade. The exodus from the old section was caused not 
merely by the desire to follow the Board of Trade, but by the superior 
type of officers and the better elevator service offered in the new finan- 
cial center. 

6. The "flat craze" From 1881 to 1883 the tendency to live in 
apartments began to grow so rapidly that it was called the "flat fever" 
or the "flat craze." In 1883, 1,142 flat buldings, many of them poorly 
constructed, divided into two parts with a front parlor and a rear 
consisting of darkened rooms and a kitchen, were built. 18 Some of the 
better ones had steam heat, gas light, and porcelain bath tubs. While 
these flat buildings were attacked on the ground that the noises of 
neighboring apartments could be heard throughout the entire building, 
and that they were lacking in light, air, and yard space, they appealed 
to many housewives because of the convenience of living on one floor, 
the fewer servants and less furniture required, and the comfort of hav- 
ing the furnace cared for by the janitor. At any rate, flats were profit- 
able to their early builders as they yielded 10 per cent net on the invest- 
ment. Their coming signified a more intensive use of residential land 
and made possible a higher value for it. The invasion of fashionable 
residential districts by the apartment building, however, lowered the 
value of such districts for high-grade homes, and property owners in 
such sections frequently made private agreements to exclude them. 
The first apartments were built along car-line streets like Cottage 
id., October 28, 1883. '* Ibid., December 9, 1883. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 137 

Grove Avenue, or on parts of fashionable residential streets that had 
begun to decline, or on medium residential streets that were in close 
proximity to fine homes. 

7. Growth of the outer edges of Chicago. Outside the city limits of the 
Chicago of 1880, but within the present city limits or adjacent to them, 
were sixty suburban towns, and villages with populations ranging from 
500 to 2,000 at that time. The feature of the decade from 1880 to 1890 
was the rapid growth of these small centers, as well as the growth of the 
city outward south of Thirty-ninth Street, west of Western Avenue to 
the West Side parks, and north of North Avenue until many of these 
independent centers became merged in a continuous line of settlement. 

Of all sections, however, the growth of the South Side in population 
and land values was most marked. Its transportation facilities to the 
downtown business district were far superior to those of the North or 
West sides. It was not handicapped by the opening and closing of the 
bridges over the Chicago River, which delayed traffic crossing the river 
so frequently as to be a source of constant complaint. It not only had 
the best suburban railway service in the Illinois Central, the Rock 
Island, and the Michigan Southern, but to this group was added the 
Chicago and Eastern Illinois in 1881. Its horse-car lines had been the 
most numerous and had provided the fastest service, yet in 1882 its 
trunk State Street and Cottage Grove Avenue car lines were converted 
into cable lines as far south as Thirty-ninth Street, with the result that 
it required no more time to go to Thirty-ninth Street than was formerly 
needed to reach Twenty-second Street. In addition to these advantages 
of quick transit, there was the appeal of the fashionable avenues that 
led out to aristocratic Kenwood and Hyde Park and the great South 
Park system. The way to the better residential districts of the West 
Side lay through a rough and turbulent quarter teeming with uncouth 
foreigners, while the South Side east of State Street presented an invit- 
ing aspect all the way from the downtown district to the parks. 
Furthermore, the effect of the rapid growth of Pullman, South Chicago, 
and Hegewisch as industrial centers exerted a pull toward the South. 
Thus the boom on Michigan Avenue, at Pullman, and at South Chicago 
diffused itself over wider areas of the South Side. Stores and apart- 
ment buildings in considerable number were constructed along the 
Cottage Grove and State Street cable lines in the eighties and land 
values on these streets had doubled by 1883. Kenwood and Hyde Park 



138 ONE HUNDRED YEARS OF LAND VALUES 

were pushing north and south. Englewood was growing fast, and its 
business center was shifting from Wentworth Avenue to Sixty-third 
Street. Woodlawn at Sixty-third Street and the Illinois Central tracks, 
a country hamlet in 1880, was beginning to acquire stores and houses. 
The population of the twenty separate communities in the 48-square- 
mile village of Hyde Park increased from 15,000 in 1880 to 45,000 in 
1883." 

8. Review of the rise in land values in the Chicago area, 1878-83. The 
accumulation of new capital from the profits of trade had been invested 
first in 1879 and 1880 in "bargains" in central business property, offered 
as a result of foreclosure proceedings, and then in homesites for actual 
use along the boulevards. Purchases of land for railroad yards and 
rights of way and for new manufacturing centers had caused a remark- 
able increase in land values in a few locations by 1881. The shifting of 
the Board of Trade to new quarters had caused a sensational advance 
in the southwest corner of the downtown area. The purchase of home- 
sites by laborers and speculative purchases had diffused the advances 
that had begun in a few spots over a wider area. By 1883 Chicago land 
values had been stabilized on a basis that on the average was thought 
to be approximately equal to the peak prices of 1873 for land within the 
city limits, with an average recovery of about 40 per cent in value from 
the depression of 1877. It was admitted that the value of suburban 
lands, except in a few favored localities, was still far below the prices of 
ten years before. In fact, within the old city itself, while there were 
some sections, as in the case of Michigan Boulevard, the new Board of 
Trade quarters, and portions of the South and North sides, where the 
land values of 1883 exceeded the 1873 peaks, there were other sections 
that had deteriorated. In particular, that part of the West Side from 
Fulton to Madison Street, west of Halsted Street to Ashland Avenue, 
was on the downgrade because of its poor improvements and its non- 
descript population. The northern and eastern parts of the central 
business district had not recovered the values of 1873. The favorite 
scenes of speculation of the decade before the land near the south and 
west parks still languished dismally. 

Real estate brokers and landowners in 1883, however, were disposed 
to view the situation with equanimity. After all the storms they had 
passed through and after all the gyrations of land values it seemed that 

19 Ibid., January 6, 1884. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 139 

values had reached a normal level. Some seventeen hundred of the 
obsolete types of houses were vacant; there was an oversupply of the 
poorer types of flats; the purchasers of suburban lots and acres had 
been taught a lesson they would not soon forget, and most of the own- 
ers of downtown business property who had mortgaged it heavily to 
erect a fine building in 1872 now possessed neither land nor buildings. 
The new owners found the situation satisfactory. Most property was 
clear of all incumbrances. The interest rate on the best mortgages had 
fallen to 5 per cent by i88i. 20 The best income property yielded 10-30 
per cent net on the investment. Under no pressure to sell, these holders 
could view the extreme fluctuations of the last ten years as evidence of 
mental disturbances which would be avoided as men learned the true 
principles of land valuation. Thus the editor of the Real Estate and 
Building Journal described the past: 

Real estate has had for the past decade a fitful history the feeling changing 
from dismay amid the ash heaps to furious speculation and back again [to dismay], 
then softening into apprehension, then into half belief and finally into full confi- 
dence. Any individual who should successively exhibit these grades of feeling with 
half the force with which they were felt by the public at large would be sent to a 
lunatic asylum. During the prevalence of them real estate went to the bow-wows. 
But as the land itself remained fixed, without a change of countenance (except for 
the better in its improvement by buildings and lawns) the market worked around 
all right again. We are of the opinion that it is more than a lucid interval. It is a 
graduation to fixed and downright common sense in land dealing and history has 
made a good deal of literature which can be profitably used as a text for dealers to 
consult in the future. 21 

Again he comments on the return to normal: 

If the statistics were published of the rise and downfall of prices and their latest 
return to a just value, a panorama of the emotions and acts it caused would prove 
perplexing but interesting. There would be found a good deal of romance, consider- 
able fiction, something of libel, immensity of imagination, bottomless depths of 
despondency, astronomic altitudes of enthusiasm and general derangement of sys- 
tem and precedent. 22 

During this period of "stability," in the latter part of 1882, Mr. J. G. 
Cozzens of the Citizens' Association, after a tabulation of sales of land 
in all parts of the city, concluded that the average value of the 121,002 
lots in the city limits was $3,168 or a total value of $383,328,000 for all 

20 Ibid., August 13, 1881. 

21 Real Estate and Building Journal, November 20, 1880. 

22 Ibid., November 13, 1880. 



140 



ONE HUNDRED YEARS OF LAND VALUES 



the land within the city limits. 23 This would indicate at least a full re- 
covery of land values within the city limits to the peak values of 1873, 
if contrasted with the writer's own estimate of $360,000,000 for the 
same area in 1873. The recovery in land values outside the city limits 
of 1883 and inside the present city limits had not exceeded 50 per cent 

TABLE V 

VALUE OF CHICAGO LAND BY PRINCIPAL USES, 1876-83 
(In Dollars per Front Foot) 







DATE 






CLASS OF PROPERTY 


Jan. i, 

1876 


Jan. i, 
1879 


Jan. i, 
1883 


SAMPLE LOCATION 
(STREETS) 


First-class retail 


$2 OOO 


$i t;oo 


$3 OOO 


State 


Banks and offices 
Wholesale business 
Second-class retail 
Local business 


1,250 
700 
500 

400 


1,100 

600 
400 
300 


2,000 
1,500 
600 
4OO 


LaSalle, Washington 
Wabash, Franklin 
N. Clark, W. Madison 
Twenty-second 


Local business 


2OO 


i ^o 


2 SO 


Cottage Grove, Thirty-fifth, 


Aristocratic residence 


3"?o 


250 


600 


Thirty-ninth 
Michigan, Prairie, Calumet 


First-class residence 


2OO 


200 


3OO 


Dearborn, Indiana 


First-class residence, West Side 




150 


2OO 


Ashland, Washington 


First-class residence, 3 miles 
out 


ICQ 


I<O 


ISO 


Avenues near Twenty-ninth 


First-class residence, 3^ miles 
out 


I2<? 


I2< 


I2< 


Avenues near Thirty-first 


First-class residence, 4 miles 
out 


IOO 


QO 


IOO 


Avenues near Thirty-fifth 


First-class residence, 4^ miles 
out 


QO 


7c 


8C 


Langley, Vincennes 


Medium residence . . . 


6S 


CO 


65 


All divisions 


Mechanics' residences .... 


CO 


40 


CO 


All divisions 


Laborers' residences 
Laborers' cheap residences. . . 
Fashionable suburban 
Genteel suburban 


30 

12 
60 
2O 


2O 
IO 

45 
15 


40 
20 
60 

3 


All divisions 
All divisions 
Hyde Park, Evanston 
Englewood 













of the 1873 values, and the total value of this outer belt was not over 
$100,000,000 in 1883. The total land value of the area within the 
present city limits of Chicago was therefore approximately $485,000,000 
in 1883 as compared with $5 7 5, 000,000 in 1873. The value of different 
types of property per front foot at the beginning of 1883 was indicated 
as shown in Table V by Frank R. Chandler. 24 

2 3 Ibid., September 30, 1882. 
** Ibid., January, 1883. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 141 

C. THE PERIOD FROM 1884 TO 1 886 

The recession in general business activity in 1883. The upward 
movement in the volume of production and in wholesale prices that 
had been in progress since 1879 was checked in 1883 when a reverse 
movement began. The prices of staple commodities like wheat and pig 
iron declined. The value of the 145 most active stocks on the New 
York Stock market mostly railroad securities fell from three to two 
billion dollars during i883. 2S Thousands of "lambs" who had been 
dabbling in stocks lost their small savings. New railroad construction 
was sharply contracted. 

The effect on Chicago trade and manufactures was shown by the 
decline in the number employed in manufactures from 114,457 i n J ^^3 
to 105,725 in 1884 and in the fall in the combined value of manufac- 
tures, wholesale, and produce trade from $1,050,000,000 in 1883 to 
$933,000,000 in i884. 26 

The effect on the real estate market of this recession in general busi- 
ness activity was to check any further advance in house and store 
rents, which had climbed steadily from 1879 to 1882, and to put a 
damper for the time on any further upward tendencies in land values. 
Labor troubles also seemed to furnish a disquieting element. A brick- 
layers' strike in the spring of 1883 slightly checked building activity. 
The more serious Haymarket riot of 1886 evoked considerable mistrust 
among eastern capitalists. 

The volume of real estate sales and of new construction dropped only 
slightly in 1884, however, and during the sharp decline that occurred in 
commodities and stocks. Chicago land values remained firm without 
any recorded decline. The real estate market, while sensitive to chang- 
ing business conditions, does not fluctuate as rapidly as the more vola- 
tile stocks. 

While land booms were being generated in Los Angeles, Seattle, 
Kansas City, Omaha, Duluth, Minneapolis, and many other cities 
which reached their peaks in 1887, the Chicago land market was slowly 
increasing its volume as the result of a steady growth of population and 
a continuous demand for lots on the edge of the built-up area. There 
were few evidences of speculation and only moderate increases in land 
values during this quiet period. 

2S Chicago Tribune, January i, 1884. 

2(> Ibid., January i, 1885; Industrial Chicago, III, 194. 



142 ONE HUNDRED YEARS OF LAND VALUES 

D. SPECIAL FACTORS IN THE MOVEMENT OF CHICAGO LAND 
VALUES FROM 1 886 TO 1894 

The Chicago land market from 1886 to 1894 was influenced to a 
remarkable degree by a series of special factors, which will be discussed 
separately for the sake of clarity, before their combined effect is de- 
scribed in the tone and temper of the market itself. The reasons for the 
extraordinary growth in land values during this period in the central 
business district and the South Side, while land values in the old inter- 
mediate residential belt were stagnant and while the value of suburban 
acres on the west and northwest sides were rising only moderately, can 
best be explained by a consideration of the following forces: (i) the 
growth of Chicago railroads and manufactures, 1886-94; (2) the growth 
of internal transportation systems, 1886-94; (3) steel-frame skyscrap- 
ers, 1885-94; (4) annexation, 1889; (5) the World's Columbian Exposi- 
tion, 1887-94; and (6) department stores and apartments. 

i. The growth of Chicago railroads and manufactures, 1886-94. 
From 1886 to 1889, inclusive, five trunk railroad lines the Wisconsin 
Central (1886), the Sante Fe (1887), the Chicago Great Western (1887), 
the Illinois Central (West) (1888), and the Cleveland, Cincinnati, 
Chicago and St. Louis (Big Four) (1889) entered Chicago. 87 In the 
two decades from 1870 to 1890 the mileage of railroads entering 
Chicago had increased 370 per cent; their tonnage 490 per cent. These 
railroads affected land values in a variety of ways. First, their direct 
demand for land for rights of way, freight yards, shops, and terminals 
gave a cash value to some land that had long lain dormant, and changed 
the character of the use of other tracts. Thus the purchase of land for 
freight yards by the Santa Fe in 1887 doubled the value of land in the 
vicinity of Thirty-fifth and Central Park Avenue, and its purchase of 
land along State Street from Sixteenth to Polk Street, to gain addition- 
al terminal facilities, completed the conversion of that old vice and 
slum area into railroad land. It thereby hastened the shift of the vice 
area southward. Second, new railroads furnishing a suburban service 
greatly increased the value of land along that portion of their route 
that was within commuting distance from the city. The building of the 
Wisconsin Central in 1886 through the territory of Douglas Park great- 
ly increased the population and land values of that territory in the 
next few years. Third, the entry of so many railroads into Chicago 

37 Tan, op. cit. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 143 

made the problem of transferring freight between them an increasingly 
important one. To solve this problem a plan was proposed for the con- 
struction of a great clearing yard on a i,2oo-acre tract about 10 miles 
southwest of the city. The land in this so-called Stickney tract was 
purchased by a syndicate in 1887. Nothing was actually done on this 
project during the period under discussion (1887-94), but its existence 
led to many rumors and the possibilities of its exploitation as a site for 
factories, mills, and packing plants was the chief cause of wild specula- 
tion in acre tracts in that vicinity in 1889 and 1890. In addition to the 
Stickney plan, many other belt-line projects were formulated in this 
period. These belt lines were usually projected to start at the lake 
front in the Calumet region and to swing from thence in a circle around 
Chicago. The Chicago and Calumet Terminal Railroad was organized 
on July 2, 1886, and the Elgin, Joliet and Eastern Railroad, the outer 
belt, was chartered on March 18, 1887. The latter road traced a wide 
arc around Chicago passing through Porter, Dyer, Joliet, and Wauke- 
gan. Fourth, the chief significance of these belt-line railroads from the 
land- value standpoint was the fact that they were linked up with the 
establishment of new manufacturing projects. At this time there- was a 
rush of manufacturing concerns to locate in the Chicago area to obtain 
the advantage of its superior terminal facilities and favorable railroad 
rates. The promoters of the belt lines not only contracted to buy 
huge tracts, like the Forsythe tract of 8,000 acres at East Chicago and 
2,000 acres near Tolleston, Indiana, but they made deals with the 
manufacturers to locate on sites to be selected by them. Farm land far 
from any transportation was bought at farm-land prices, belt lines 
projected through the site selected, manufacturing plants projected 
along the projected belt, townsites platted and lots sold to clerks in the 
city. Schemes for belt lines and manufacturing towns were one of the 
most prominent features of the acre and lot sales of 1889 and 1890. 
They contributed toward the direction of speculative activity to the 
suburbs and to new towns as far as forty miles from Chicago. 

a) The growth of manufacturing. The growth of manufacturing in 
the Chicago area was exceptional, the number of employees and the 
value of manufactured products almost doubling from 1884 to 1890, as 
Table VI shows. 28 The census figures for 1890 are not strictly compara- 
ble with the statistics for the other years collected by local authorities, 

28 Industrial Chicago, III, 194. 



144 



ONE HUNDRED YEARS OF LAND VALUES 



as the census figures included many small firms not previously counted. 
A peak was unquestionably reached in 1890, however, that was higher 
than the returns for 1891, even with the products of small firms de- 
ducted. The rapid increase in the number employed and the wages 
paid from 1885 to 1890 as indicated by Table VI accounts to a great 
extent for the rapid increase in "cheap" lot sales in this period, for 
it is when workers are fully employed that they accumulate small sur- 
plus funds for investment. 

TABLE VI 

CHICAGO MANUFACTURES 1884-93, SHOWING NUMBER OF 

WAGE-EARNERS, AMOUNT OF WAGES PAID, AND 

VALUE OF PRODUCT 



Year 


No. Employed 
in Manufactures 


Wages Paid 
(Millions of 
Dollars) 


Value of 
Product (Millions 
of Dollars) 


1884 


IQC , 72? 


$ 48 I 


$292.2 


i88<; 


IOQ,62< 


51 . 2 


316.9 


1886 


126,4.^0 


67.7 


349- 7 


1887 


134, 6l5 


74.6 


403. i 


1-888 


132 ,016 


73.4 


4OI .2 


1889... 


151,070 


84.5 


452. 2 


1890 


2IO 336 


124 O 


664.6 


1891 


180,870 


IO4 O 


^67 .0 


1802 


186,085 


114. 3 


586.3 


180? 


171 , 7OO 


99. 2 


574-5 











2. Internal transportation, 1887-94. A succession of devices for 
faster means of local transportation followed each other rapidly in this 
period, enabling people to skip the intermediate areas partially filled 
with obsolete houses occupied by the poorer classes and seek homesites 
where the houses were new and the neighborhood had not acquired an 
adverse character. These devices were (i) cable lines, (2) elevated 
steam railroads, and (3) electric surface lines. 29 

The South Side again led the way until the end of this period. By 
1882 it had cables on its main trunk lines of travel, State and Cottage 
Grove Avenue, and in 1887 before cable lines had been put in operation 
on either the North or the West sides, the State Street cable was ex- 
tended to Sixty-third Street and the Cottage Grove cable was extended 
to Sixty-seventh Street, with a branch running down Fifty-fifth Street 

29 See maps of the Chicago street-car lines in 1891 (Fig. 24). 



MAP OF CHICAGO 

- SHOWING - 



STREET CAR LINES IN 1891 



LEGEND 

CABLE LINES 
HORSE CAR LINES 
ELECTRIC SURFACE LINE 



HOMER HOYT FROM DATA rUMHMCA BY 




FIG. 24 



i 4 6 ONE HUNDRED YEARS OF LAND VALUES 

to Lake Park Avenue. To supplement the cable, horse-car lines on 
cross-streets such as Sixty-ninth Street from State to Ashland Avenue, 
Twenty-sixth Street from Cottage Grove to Halsted, Thirty-fifth 
Street from State Street to the South Fork, Forty-third Street from the 
Illinois Central tracks to State Street, Forty-seventh Street from State 
to Ashland Avenue, Sixty-third Street from Halsted to Ashland Ave- 
nue, and Vincennes Avenue from Sixty-ninth Street to Seventy-ninth 
Street, were built from 1887 to 1889. A five-cent fare with one free 
transfer to any cross-line greatly stimulated the settlement and rise 
in value of the vacant lands on the southwest side at the end of the 
cross-lines. Not satisfied with this progress, which increased the speed 
on its main trunk lines from the horse-car rate of four to six miles an 
hour to the cable-car rate of nine to twelve miles an hour, the South 
Side was the first to secure elevated steam transportation, which moved 
express trains at a speed of fourteen to fifteen miles an hour. The 
South Side Rapid Transit Company began to build its structure be- 
tween Twelfth and Thirty-ninth Street in 1890, and started to operate 
trains from Congress Street to Thirty-ninth Street in June, 1892. Its 
future course south of Thirty-ninth Street was decided in 1891 to the 
extent that it would run in the alley between Calumet and Prairie 
avenues, but for a time it was thought that its southern terminus would 
be at Seventy-first and St. Lawrence Avenue or even at One Hundred 
and Eleventh Street. The World's Fair undoubtedly was responsible 
for the decision to build to Jackson Park. Its line was completed south 
to Fifty-fifth Street in October, 1892, and by May i, 1893, it was 
finished all the way to Jackson Park. 

The superiority of the transportation facilities on the South Side and 
their steady improvement in this period are among the chief causes of 
the uninterrupted rise in its land values throughout the era from 1882 
to 1890. First, along the routes of the cable lines State Street and 
Cottage Grove Avenue there were steady building and rise of land 
values during the eighties; second, along the horse-car lines, which 
acted as feeders for the cable lines, values rose as virgin acre tracts were 
open for settlement; and, third, along the route of the "Alley L" and 
near its stations on cross-town streets land values rose rapidly in this 
period. "Transfer corners," or corners where two street-car lines inter- 
sected, first acquired a high value for business purposes, as the corners 
of Thirty-fifth and Thirty-ninth and Cottage Grove Avenue and 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 147 

Thirty-first and Indiana Avenue attained peaks not before reached 
outside the central business district. 

The North and West sides were lagging far behind the South Side 
at this time in transit facilities. They were both handicapped by the 
bridge evil at first as both the LaSalle and the Washington Street 
tunnels were not kept in repair for horse-vehicle or pedestrian traffic. 30 
The North Side improved its service by building its first cable lines on 
Clark Street from Diversey to the downtown section, and on Wells 
Street from Illinois Street to Lincoln Park, in 1888. These cable lines 
entered the main business district through the LaSalle Street tunnel. 
Additional North Side cable lines were constructed on Lincoln Avenue 
from Center to Fullerton and on Clybourn Avenue from Division to 
Fullerton Avenue in 1890. A further improvement in transportation 
was furnished by the building of the Chicago and Evanston Railroad 
along the north shore near the lake. Land values along the North Side 
advanced along the routes of these new transit lines, but the service of 
the North Side cable, on account of frequent breakages, was said to be 
greatly inferior to that of the South Side cable. Furthermore, the 
North Side could not match the frequent suburban train service of the 
South Side. 

The West Side had the poorest transportation service of all at this 
time. Its horse-car lines running east and west, to and from the main 
business district, were the slowest in the city, the Harrison Street line 
barely making four miles an hour and cross-lines running north and 
south being almost wholly lacking. It was not until 1890 that a cable 
line was completed on Madison Street from the downtown area west 
to Crawford Avenue. By 1891, however, cable lines were completed on 
Milwaukee to Armitage, and on Halsted Street and Blue Island Ave- 
nue. These cable lines entered the main business district through the 
Washington Street tunnel. In 1890 an electric surface line, the Cicero 
and Proviso Electric, was completed from the end of the Madison Street 
cable line on Madison Street to Harlem Avenue, and this line caused 
a rise in land values along its route. The building of the Wisconsin 
Central Railroad in 1886 had raised land values in the vicinity of 
Douglas Park. An ordinance for an elevated line on Lake Street had 
been passed on December 18, 1888; but the company building it went 

30 The Washington Street tunnel was completed January i, 1869, and the LaSalle Street 
tunnel was opened July 4, 1871 (Moses and Kirkland, op. cit., I, 145). 



148 ONE HUNDRED YEARS OF LAND VALUES 

through many vicissitudes and it was not until November 6, 1893, that 
it was in operation from Market and Madison streets to Lake and Cali- 
fornia Avenue. Meanwhile, a comprehensive scheme for West Side ele- 
vated transportation was formulated in the Metropolitan Elevated 
Company, but this project did not become an actuality until 1895. 

a) The cable loops. By 1890 three separate cable systems, from the 
South, North, and West sides, respectively, after collecting the pas- 
sengers from their tributary horse-car lines and ancillary cable systems, 
carried them through three separate gateways to the main business 
section and deposited them along a brief loop which each cable line 
transcribed in the central area. 31 Long before the elevated loop became 
an accomplished fact, downtown business men were taught the value of 
a traffic loop which deposited the passengers gathered from a wide 
residential area into a limited business area. The oldest loop, formed 
by the South Side cables in 1882, inclosed the section between State 
Street, Wabash Avenue, Lake Street, and Madison Street. It contrib- 
uted greatly to the rise of business frontage values at State and Madison 
streets. The loop made by the North Side cables in 1888 was formed by 
the North Side cable lines turning from Clark to LaSalle Street at 
Illinois Street, thence running south on LaSalle Street to Monroe 
Street, east on Monroe Street to Dearborn Street, north on Dearborn 
Street to Randolph Street and west on Randolph Street to LaSalle 
Street. This loop was one of the chief causes for the sudden rise of 
Dearborn Street from a place of obscurity to one of the most prominent 
office streets of Chicago in 1889, as it was also the cause of the decline 
in the value of North Clark Street south of Illinois Street where the 
cable line turned from Clark Street. The West Side cables, entering the 
central business district through the Washington Street tunnel, formed 
a loop around the section from Randolph to Madison streets and Wells 
to LaSalle streets. The cable lines on Randolph Street and LaSalle 
Street that were built from 1888 to 1890 were undoubtedly a factor in 
prompting the location of a number of new skyscrapers on these 
streets, reversing the southward flow of business that had begun with 
the migration of the Board of Trade. 

b) Projected elevated and surface lines. Not merely the lines that were 
actually constructed, but visionary lines that were projected by pro- 
moters but never built had a great influence on the speculative real 

31 See Fig. 24 for a map of transportation lines in 1891. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 149 

estate market of 1889 and 1890. In the welter of projects that were 
discussed or that were started but could not overcome all the obstacles 
to obtaining the consent of property owners, securing an ordinance 
from the city council, and raising the necessary capital, it was difficult 
for the average lot-buyer to decide which transportation lines would 
succeed and which would fail. Even in the case of lines already partly 
constructed, it was often not known where the termini would finally be 
located. Nearly every subdivision was sold under the assurance that an 
elevated line or electric street-car line would run directly past the buy- 
er's lot, or as close as it would be desirable to have it run. Had all the 
projected lines been actually constructed, the city and its suburbs 
would have been gridironed with elevated and electric lines. As these 
transportation schemes by their number and variety confused land- 
buyers, and as some of these illusions had more effect on the market of 
1889 and 1890 than the actual construction of lines did on the market 
of 1896, it may be well to mention some of them. There were abortive 
elevated lines like the Chicago, Cook County Passenger and Dummy 
Railroad, which secured the consent of the majority of the owners for 
an elevated line along Milwaukee Avenue; the Milwaukee Alley Ele- 
vated Company; and North Side elevated lines that were to run from 
the downtown business district to Evanston, such as the Chicago and 
Evanston Elevated Railrod and Transit Company, the Cass Street, 
Lake View and Evanston Railroad Company, the Chicago Transit, and 
the Citizen's Rapid Transit Company. There were South Side schemes 
like the Calumet Transportation Company (from Blue Island to 
Chicago), the proposed elevation of the Rock Island Railroad, the 
Forsythe Elevated Railroad Company (to run from the Indiana state 
line to Chicago), a State Street elevated line, and an elevated line that 
was to run on Sixty-third Street and southwest through Englewood. 
Again there was the Chicago North and South Elevated Railroad Com- 
pany that was to run north and south from city limits to city limits on 
Halsted Street. All these plans, vividly set forth by their promoters 
and acted upon as almost certain of realization in 1890, had died a 
natural death by i89i. 32 

3. Steel-frame skyscrapers, 1885-94. Before 1880 there were few 
buildings in Chicago exceeding six stories in height, and none higher 
than eight stories. Crude elevators, worked by hand power, imposed 

32 Chicago Tribune, April 12, 1892. 



150 ONE HUNDRED YEARS OF LAND VALUES 

the first limitation on vertical expansion. As elevators were improved 
by the use of water, steam, and electric power, it was found that the 
increased weight of the stone and masonry on the ground floor that was 
necessary to support additional stories curtailed the valuable first-floor 
space. Furthermore, not only did the expense of the foundations in- 
crease at a disproportionate rate for each additional story added, but an 
absolute limit to height was soon reached when the base, no matter 
how massive, would support no more weight. Even with these 
handicaps, there was the expanding demand for floor space in a limited 
area which exerted a strong pressure from 1881 to 1885 to raise the 
height of buildings in the new Board of Trade quarters. The height 
limit on five buildings was pushed up to nine stories and, finally, by 
1884 and 1885, to eleven and twelve stories. One of these buildings, the 
Home Insurance Building, started in 1884 at the corner of LaSalle and 
Adams streets, had a steel frame. While not generally recognized at 
the time, its architects had hit upon a principle that was to revolution- 
ize office-building construction. The weight of the upper floors was no 
longer to rest upon the first floor, but a steel frame like a basket sup- 
ported each floor at its own level, so that the masonry on the top of the 
steel frame could be built first if desired. The chief limitation to the 
height to which buildings could not be pushed upward was imposed by 
the increasing space needed for elevators. 

The Home Insurance Building was somewhat of a compromise be- 
tween the old and the new types of construction, so that the full pos- 
sibilities of the new method were not at first recognized or appreciated. 
In fact, the upper floors of these nine-story buildings were at first 
avoided by tenants, and there was a period of hesitation in which new 
buildings were planned with foundation strong enough to support nine 
stories, but which were first to be carried only to a height of only seven 
stories. With the completion of so many new office buildings in the 
Board of Trade quarters, some of which were only partially filled, there 
seemed, moreover, no pressing need for more and higher buildings. 

The tide turned in favor of the skyscraper in 1888 and 1889 when 
the Tacoma Building at the northeast corner of Madison and LaSalle 
Street, a thirteen-story building of out-and-out steel-skeleton type, was 
started and finished. The popularity of the upper floors on account of 
the abundance of air and light had been conclusively demonstrated. 
The success of the first tall buildings, made possible by their scarcity, 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 151 

by the prestige of having an office in them, and by the fact that the 
sites for them had been purchased at values based on the income of six- 
story buildings, started a craze to put up skyscrapers that was not to be 
explained by economic considerations of net income alone. While the 
prospectus of these buildings always presented an attractive income 
set-up on the assumption that all the offices would be rented, which 
would probably have provided incentive enough in the gullible days of 
1889, other non-commercial motives played an important part. There 
had been no general advance in office rents and, in fact, a decline in the 
Board of Trade quarters. It was estimated in 1885 that seven-hundred 
new offices were required annually, but in the period from 1885 to 
1888, thirty- three hundred new offices had been built, of which five 
hundred were vacant. 33 

In spite of this apparent lack of need for more office space, great 
structures were erected. The Auditorium, finished in 1889, had been 
built as a civic enterprise by a stock subscription of wealthy men 
to provide a hall for national political conventions. The eighteen-story 
Masonic Temple was financed by the sale of stock to Masons on the 
plea that it would not only be profitable but would provide lodge halls 
and be a monument to their order. The Medinah Temple was a similar 
lodge enterprise. A projected thirty-four-story Odd Fellows Temple, 
however, proved to be a castle in the air. The example of the Audi- 
torium was followed in the case of many other buildings. In this period 
a total of twenty-one buildings was constructed out of the proceeds of 
the sale of stocks and bonds $15,500,000 in stocks, and $6,000,000 in 
bonds to wealthy men. As ninety-nine-year leases had become popu- 
lar and it was possible to make loans upon them, some of these build- 
ings were constructed by promoters with very little cash capital. 

The financial success of these new skyscrapers was, until the end of 
the World's Fair in 1893, greater than might have been anticipated. 
Tenants poured out of the old buildings, now rapidly becoming obso- 
lete, into the new and more modern quarters that had better elevator 
service, more ornate fixtures, and more light and air. 34 This exodus was 
facilitated in many cases by the assumption of old leases by the agents 

33 Ibid., March 25, 1888. 

34 For an impression by a contemporary writer of the prestige attached to an office in a 
skyscraper see Henry Blake Fuller's novel, The Cliff -Dwellers (New York: Harper & Bros., 
1893)- 



152 ONE HUNDRED YEARS OF LAND VALUES 

of the new buildings. A large demand for office space sprang up from 
the new manufacturing concerns that were locating in or near Chicago 
at this time. Other tenants were secured from the increasing numbers 
of people who were entering the real estate business, and from pro- 
moters of enterprises for the World's Fair, who sought to enhance their 
prestige by having an office in these popular skyscrapers. Doctors and 
dentists found that it paid to have an office in high buildings near the 
State Street stores. Department stores discovered that people pre- 
ferred to ascend in elevators rather than walk a block to a side street. 
Thus vertical rather than lateral expansion became the order of the day, 
and some of these structures paid handsome returns, for a time, even on 
their common stock. 

The high buildings were well distributed over the downtown area. 
There was a group at the south end of the business district mainly on 
Dearborn Street, such as the sixteen-story Monadnock Building (1891), 
sixteen-story Manhattan Building (1893), the Old Colony Building 
(1893), the Ellsworth Building (1893), the Marquette Building (1894), 
the Great Northern Hotel (1893), and the Hartford Building (1894). 
There was another group along LaSalle Street such as the Stock Ex- 
change Building, the Y.M.C.A. Building, and the New York Life 
Building. Still another group was located at the north end of the cen- 
tral business district on Randolph and Washington streets, such as the 
eighteen-story Masonic Temple (1891), the Ashland Block (1891), the 
German Theater Building (1891), the Cook County Abstract (now Chi- 
cago Title and Trust) Building (1891), and the Unity Building (now 
American Bond and Mortgage Building) (1891) on Dearborn Street near 
Randolph. The Columbus Memorial Building, the Reliance Building, 
and the Champlain Building were erected on State Street from Wash- 
ington to Madison streets. These buildings were regarded as so many 
anchors to hold trade in their vicinity, and the large number of tenants 
concentrated in these structures did have a tendency to enhance the 
value of surrounding business property. 

The advent of the skyscraper was responsible for a marked increase 
in ground values in the central business district of Chicago from 1889 to 
1891. Although the twenty-five or thirty buildings from twelve to six- 
teen stories in height erected from 1889 to 1894 if bunched together 
would not have occupied more than three solid blocks, or 7 per cent of 
the main business district, all land in that area was revalued on the basis 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 153 

of what it would produce if occupied by a sixteen-story building. 
"Tear down that old rat trap and erect a sixteen-story building" became 
the slogan of 1889, and if the owner of the land did not actually erect 
one himself, he constructed a hypothetical sixteen-story building on his 
land to determine what his land would be worth to someone who did 
want to put up such a building. Had all these lots in the downtown 
area been covered with skyscrapers, there would, of course, have been 
a vast oversupply of offices which would have caused a reduction in 
rents to a point that would have nullified these calculations. The re- 
sult of revaluing the ground on the basis of what it would yield if im- 
proved to the best advantage was that the income on old buildings 
dropped to 2 per cent on the higher land value. Stories were added to 
buildings whose foundations were strong enough to stand it, and other 
old structures were remodeled and modernized to enable them to hold 
their tenants in the face of the new competition. Skyscrapers thus in- 
creased the potential floor space that could be obtained from the same 
ground area. It was, however, the more intensive use of the ground 
floor areas due to the increased number of shoppers rather than the 
taller buildings that was responsible for higher land values in the retail 
shopping centers on State Street. 

Opposition to the skyscraper had begun to develop even in 1889. 
It came first from the owners of property on the edge of the main busi- 
ness district and on secondary business streets who wanted business to 
expand laterally rather than vertically. Second, it came from the own- 
ers of some skyscrapers already erected who wanted to enjoy a monop- 
oly advantage. Third, it came from owners of old buildings who ob- 
jected to the assessment of their land for taxation on the basis of its use 
for a tall building. These various interests were successful in securing 
the passage of an ordinance in 1893, limiting the height of buildings to 
130 feet, or virtually ten stories. A few taller buildings were put up 
afterward under special permits secured before the passage of the ordi- 
nance. As there was an oversupply of high office buildings by 1894, 
this ordinance did not have a pronounced restrictive tendency of itself, 
as other forces were coinciding with it to check further skyscraper 
construction. 

4. Annexation. On June 29, 1889, by an affirmative popular vote 
of both the city and the townships affected, a territory of 120 square 
miles was annexed to Chicago. By the addition of the townships of 



MAP OF CHICAGO 



OF CITY LIMITS 
BY ANNEXATIONS 



LEGEND 

ORIGINAL TOWN 
CITY LIMITS. 1870 TO 1886 
HIJ ANNEXATIONS. 1887 TO 1895 

7 1 """" Ijljj ANNEXATIONS. 1699 TO 1928 




PRtPARED BY HOMCK HCYT 



FIG. 25 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR iSS 

Hyde Park, Lake, Lake View, Jefferson, and part of Cicero, the area 
within the city limits was increased from 36 to 169 square miles. 35 
With the addition of over two hundred thousand people in the new ter- 
ritory, Chicago had over a million population and became the second 
largest city in the United States. 

The actual effect of annexation could easily be overestimated. The 
annexed territory had long been closely associated with Chicago. The 
formal extension of the city limits did, it is true, exert an important 
influence in enabling the outlying territory to secure city water service, 
sewers, pavements, and police and fire protection, which were most im- 
portant factors in securing a favorable vote. 36 The psychological ef- 
fect of the announcement that Chicago was a city of over a million 
people, however, coming at a time when other cities were using every 
possible method to swell their population figures by adding suburban 
areas and even padding the census figures, drew the particular atten- 
tion of the nation to the remarkable growth of Chicago in sixty years 
and aided it in securing the World's Fair. From a subdivider's stand- 
point, a great expanse of prairie had been brought inside the city limits, 
to which city water, sewers, and pavements might be extended or pro- 
jected and which could be platted and sold as Chicago city lots. 

5. The World's Fair. The fact that a World's Fair to celebrate the 
four-hundredth anniversary of the voyage of Christopher Columbus 
would probably be held somewhere in the United States in 1892 led to 
anticipations as early as 1887 that Chicago would be selected as the 
site. The Chicago members of Congress worked with such astuteness 
to effect political combinations to bring this about that by 1889 
Chicago was considered the probable choice of Congress. Although 
New York was a serious contender for the honor, with St. Louis and 
Washington as other candidates, Chicago received the majority vote 
of Congress on February 25, 1890. This favorable action had already 
been largely anticipated by local real estate men, but non-resident 
owners of Chicago property were so surprised that they advanced the 

35 For details as to area annexed at this time, and as to other smaller areas annexed 
shortly afterward, see Fig. 25. 

36 This was particularly important in the township of Jefferson according to a statement 
made to the writer in September, 1933, by William H. Spikings, an old resident. These ad- 
vantages were not so great in the case of that part of Hyde Park near Fifty-third Street and 
Lake Park Avenue which had its own waterworks. Here there was strong opposition to an- 
nexation, according to John E. Cornell, a son of Paul Cornell, the founder of Hyde Park. 



156 ONE HUNDRED YEARS OF LAND VALUES 

prices of their holdings 25 per cent or withdrew them from the market 
altogether. 

After Chicago had been selected as a site, there was a baffling delay 
of over six months before it was decided in what part or parts of the 
city the Fair would be held. At first there were proposals for dividing 
the Fair into two sections, giving part to the South Side and part to 
the West or North sides. A united Fair was next decided upon, and 
the first location picked for it was on the lake front near the downtown 
area on two hundred acres of ground to be made on the lake front for 
that purpose. In spite of a majority decision in favor of the lake-front 
site, a minority, led by Lyman J. Gage, influenced partly by the fear 
that the manufacture of so much new land would lower the value of 
central business property, induced the World's Fair Commission to 
select Jackson Park as the main site of the Fair. 37 The lake front, how- 
ever, was to be retained as the gateway to the Fair. West Side politi- 
cians then attempted some machinations with the state legislature 
that would put Jackson Park out of the running. The South Park 
Commissioners had sought permission to issue bonds to drain Jackson 
Park, the cost of which was to be borne by the people as part of the 
permanent expense of improving the park, for it was believed that 
those promoting the Fair would not incur this cost when other sites 
already improved were available. Those favoring the West Side parks 
as a site for the Fair sought to prevent a law authorizing this South 
Park bond issue from being passed. This indirect attack failed, how- 
ever, and the West and North sides were eliminated as possibilities. 
The exact location of the Fair was not yet settled. The idea of extending 
the Fair along the lake front north of Jackson Park was abandoned 
and the consent to use the Midway in addition to Jackson Park was 
obtained from the South Park Commissioners. The request made in 
September, 1890, for the use of Washington Park also started a wild 
boom in lots along Cottage Grove Avenue from Forty-ninth to Sixtieth 
streets, but this movement collapsed when the South Park Commis- 
sioners refused permission. After many months of vacillation, the 
selection of Jackson Park and the Midway as the only site of the Fair 
was finally made. 

The expectation that Jackson Park would be the final choice as the 
site of the Fair had already caused land values near by to rise to what 

& Chicago Tribune, September 13, 1890. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 157 

the real estate editor of the Chicago Tribune called "crack-brained 
altitudes." The chances of the West and North sides had always 
seemed so remote that they never had an appreciable land boom on the 
possibility of securing the Fair. The imagination of the times alter- 
nated from speculation about the site of the Fair to the actual content 
of the Fair itself. Some of the bizarre and grandiose conceptions of 
projected World's Fair towers may give the readers an idea of the ex- 
travagant fancies of a boom era. 38 

The effect of the World's Fair on land values in the vicinity of Jack- 
son Park and the Midway had been almost fully discounted before the 
end of 1890, nearly three years before the Fair opened its gates. In the 
meantime, during 1891 and 1892 landowners in that vicinity sought to 
realize something on their investment in land which they were unable 
to sell at a profit by building World's Fair hotels and apartments. 
Many of these were built along Fifty-fifth Street and near Jackson 
Park. The extravagant hopes that were entertained as to the possible 
income to be derived from World's Fair guests were doomed to grievous 
disappointment. The crowds were slow in coming, the full peak of at- 
tendance lasted only a short time, and soon after the close of the Fair 
most of these projects were in the hands of receivers. The low rents at 
which the vacant apartments were offered in the winter of 1893-94 
attracted tenants from all parts of the city to this section. 

The Fair proved to be a great disappointment to the hopes of real 
estate owners. While its construction was going on, many potential 
buyers waited for the reaction in land values which was expected to take 
place after it closed. While it was open and attracting the greatest 

* 8 The following were some of the proposed projects submitted by various people in 1890: 
"Buildings 50 stories high, amphitheatres to hold 100,000 people, a building 1000 feet high 
in the form of an eagle, a rotating coliseum, a building six stories high resting on metal re- 
plicas of the animals mentioned in Revelations, a building with 42 towers representing each 
of the states, a collection of vast halls under a single roof, a combined park and opera house, 
a Tower of Babel 40 stories high with a different language spoken on each floor, a tower on 
rollers, a tower half a mile high surmounted by a globe and the statue of Columbus, five 
floating islands turning on a central pivot, an aerial island supported by six balloons, the 
construction of all buildings on floats with viaducts between them, a colossal globe with 
two theaters on the interior, a ground map of the United States covering 750 acres, the 
hanging gardens of Babylon reproduced, a mountain 1000 feet high with a glass palace on 
the summit, a replica of Dante's Hell, a telescope on a tower powerful enough to discover 
animals on the planets, a monument to Lincoln 1000 feet high, a replica of Niagara Falls 
worked by steam power, a pyramid 1200 feet square at the base and 1200 feet high and a 
reproduction of the seven wonders of the ancient world" (editorial, ibid., June 15, 1890). 



158 ONE HUNDRED YEARS OF LAND VALUES 

crowds, it engendered a holiday spirit that was not conducive to the 
purchase of real estate. When it was closed, amid a financial depres- 
sion, leaving empty flats and apartments in its vicinity, a deeper gloom 
set in than had been anticipated. The World's Fair, however, was un- 
justly made the scapegoat by the generation that succeeded for all the 
ills that followed the falling-off in real estate activity after 1890 and 
the panic of 1893. Its specific influence was confined to a few square 
miles near Jackson Park, and it was but one of a number of factors 
contributing to the boom of 1890. Had it occurred at another time, the 
effect it exerted on land values might have been altogether different. 

6. Department stores and apartments. Large stores with many de- 
partments under one roof were an innovation of this period that made 
heavy inroads on the business of the small store. These stores adver- 
tised extensively in the newspapers and offered "bargains" to the 
housewife as well as a variety of goods that the small stores could not 
match. The improved transit facilities to the downtown area facilitated 
the rise of these large emporiums, and their popularity in turn was a 
contributing cause of the rise of land values in the central business dis- 
trict, as it was likewise a factor in depressing the values of certain 
streets such as West Madison Street, Milwaukee Avenue, and Cottage 
Grove Avenue. 

The increasing demand for apartments as a result of the improved 
types of apartment construction and room layout was tending to raise 
the value of land suitable for apartment sites and to lessen the tendency 
to spread out into the suburbs. 

The aggregate effect of the factors just described was to concentrate 
business in the downtown area, to depopulate the intermediate belt of 
old wooden houses, and to build up virgin land on the edge of settle- 
ment. Such was the specific effect of the swifter transportation afforded 
by cable, steam, elevated, and electric lines that enable people to hurry 
past the decaying areas built up by the transit lines of the former gen- 
eration. It was the effect of the skyscrapers and department stores in 
concentrating business in a small downtown area, and it was the ef- 
fect of manufacturers and belt-line railroads, of annexation, of the 
World's Fair, and of new suburban transit lines to spread out the resi- 
dential area over new tracts that were not stigmatized by obsolete 
buildings or an immigrant population. Many half -built-up tracts close 
to the heart of the city were skipped over in this exodus to new unde- 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 159 

veloped tracts. In 1889 an observer estimated that the population 
within the old city limits could be doubled if it were compactly settled. 
The factors just considered have had a most potent effect in deter- 
mining the extent of the variation between land- value peaks and val- 
leys and in fixing the location of the high points on the land- value 
maps. It would be a mistake, however, to suppose that such forces 
would have produced the same effect operating in a vacuum or apart 
from the general market conditions that prevailed from 1887 to 1894 
in Chicago. The tone of the land- value market itself and the psychol- 
ogy it generated determined to a considerable extent what weight and 
bearing these factors would immediately have on land values. It is 
therefore necessary now to describe this market as a complex entity. 

E. THE MOVEMENT OF LAND VALUES IN THE CHICAGO REAL 
ESTATE MARKET, 1886-94 

The beginning of a new boom, 1886-88. The new equilibrium of 
Chicago land values in which the land within the city limits had re- 
gained by 1883 the peak level of ten years before was maintained with 
little change, despite the decline in general business activity, during 
1884 and 1885. In 1886 there was a marked gain in the volume of 
manufacturing and of real estate transfers as compared with the pre- 
ceding year, the total value of real estate sales increasing from fifty- 
seven to eighty-seven million dollars. 39 Subdivision activity was still 
restricted. The 4,135 new lots platted in Cook County in 1886 showed 
an increase over the 3,210 laid out in 1885, but both these amounts were 
relatively low compared with the peak figures of 1873. Land values in 
Hyde Park and Englewood were advancing. 40 The construction of the 
Wisconsin Central Railroad through the territory west of Douglas 
Park was arousing hopes on the part of those owners who were nearly 
worn out by the payment of interest and taxes since the boom of 1873 
that they might soon get their money back. 41 Property in the down- 
town section was firm and values were slowly advancing, although 
property subject to long-term leases could still be bought at prices that 
would net 7 or 8 per cent to the owner. 42 

In 1887 a number of new factors appeared to enliven the real estate 

39 Real Estate and Building Journal, January 2, 1892. 

4 Chicago Tribune, August 8, 1886. 

4' Ibid., September 5, 1886. * Ibid., October 31, 1886. 



160 ONE HUNDRED YEARS OF LAND VALUES 

market. The Santa Fe Railroad bought land for its yards and right of 
way into Chicago. 43 The Stickney tract was purchased. The South 
Side cable lines were extended from Thirty-ninth to Sixty-third and 
Sixty-seventh streets. The first rumors of the coming World's Fair 
were being discussed. 44 The Calumet Canal and Improvement Com- 
pany bought the Forsythe tract of 8,000 acres at East Chicago, 
Indiana, for a manufacturing center. People were vacating houses in 
the city to go to the suburbs. New belt-line companies were being or- 
ganized. There was talk of new cable lines and of elevated railroads. 45 
The yield on the best improved properties had fallen to 6 per cent as 
compared with the 8 or 9 per cent yield of a few years before. 46 The 
number of new lots subdivided increased from 4,135 in 1886 to 13,714 in 
1887. In the fall, as the land booms in Kansas City, Omaha, and 
Minneapolis began to wane, veteran operators from those cities began 
to come to Chicago and to marvel at the cheapness of its acre tracts. 47 
Chicago investors still remembered the losses they had sustained in 
acre property bought in the boom of 1873, but the newcomers had more 
confidence and bought acres on the Southwest Side that the natives 
would not touch. 

The succession of favorable factors continued in 1888. The cable on 
North Clark Street was completed from Lincoln Park to the main 
business section. 48 The South Side Elevated Company obtained the 
consent of a majority of the property owners along its proposed route 
and secured an ordinance from the city council permitting it to con- 
struct its line. The suburbs were building up rapidly. Extensive 
growth was taking place over a wide area within the city. New stores 
and flats were going up along Cottage Grove Avenue as far south as 
Fifty-fifth Street. 49 The population of Englewood had increased to 
20,000. The territory northwest of Milwaukee and Armitage avenues 
was being settled. 50 The Polish quarter at Chicago, bounded by Ash- 
land, Clybourn, and Carpenter streets, had gained a population of 
30,000, principally since i886. SI In aristocratic Edgewater there were 

Ibid., May 22, 1887. 

"Ibid., August 21, 1887. &Ibid., April 29, 1887. 

Klbid., May 22, 1887. < 7 Ibid., January 15, 1888. 

4 g Statement of J. V. Sullivan, assistant to the president of the Chicago Surface Lines, 
to the writer in 1932. 

49 Chicago Tribune, August 4, 1888. 

5 Ibid., September 16, 1888. si ibid., November 4, 1888. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 161 

200 people where there had been none in i886. 53 In the vicinity of 
Douglas and Garfield parks, in the neighborhood of Halsted Street 
between Fifty-fifth and Sixty-ninth streets, 53 in the territory along 
Fifty-fifth Street east of Cottage Grove, in the area along Sixty-third 
Street near the Illinois Central tracts and near the Rock Island tracts 
in Englewood, many buildings were being erected in 1888. The belt of 
growth was on the outer edge of the old city. The belt of wooden 
houses built after the fire of 1871 was now passed by for the zone of new 
growth. West Side landowners in particular complained of the decay 
of the region from Grand Avenue to Madison Street and from Halsted 
to Ashland Avenue and of the increasing number of vacant houses close 
to the city. Optimism on the whole prevailed at the close of 1888. 
' 'Everyone is a bull on real estate" expressed the tone of the market in 
November, i888. 54 The value of downtown property, notwithstanding 
stationary rents and interest rates, had risen because it was now capi- 
talized on a 5 per cent basis, instead of the 7 or 8 per cent basis of 1885 
and the 10 per cent basis of 1873. ss The number of new lots subdivided 
in Cook County had increased from 13,714 in 1887 to 18,813 in 1888 
and acre values were rising. In the downtown area there was an eager 
demand for property situated north of Madison Street and east of 
Wells Street, particularly on Dearborn Street. Except for South Water 
Street, which had a monopoly of the commission-merchant business, 
there was less demand in 1888 for business frontage north of Madison 
Street than for that south of it. The heavy hardware firms were mov- 
ing from Lake Street to the West Side in the section on Canal Street 
from Randolph Street to Madison Street. 56 

As credit conditions were favorable, and as the decline in railroad 
stocks and bonds and the lull in the booms in real estate in other cities 
had turned the attention of speculators to Chicago real estate, the stage 
was set late in 1888 for a boom. 

The boom under way, 1889. The mood of the market of 1889 was one 
that was ready to respond quickly to new developments or even to the 
rumors of coming projects. Consequently the effect of the announce- 
ment of new electric lines, manufacturing towns, skyscrapers, a larger 
city with over a million population, and a coming World's Fair regarded 

vibid., October 28, 1888. 

^ Ibid,, August 5, 1888. ss Economist, October 19, 1889. 

id., November 18, 1888. s6 Chicago Tribune, June 22, 1888. 



162 ONE HUNDRED YEARS OF LAND VALUES 

as probable stimulated the imagination of every class of people in 
Chicago and attracted investors and speculators from all over the 
United States. The earnings of local business men had been favorable, 
the number employed in manufacturing industries in Chicago had in- 
creased from 132,000 to 151,000 in a year, people were bringing their 
savings and speculative profits from other cities, and immigrants re- 
cently arrived in Chicago had hoards they would not trust to the banks. 
Tales of profits in real estate already made by their neighbors circu- 
lated among the residents of local communities and aroused their desire 
to use these accumulating funds for the purchase of Chicago land. This 
desire was artificially enhanced by professional promoters and sub- 
dividers. 

This demand, in the main, divided itself into an inquiry for central 
business property, on the one hand, and for outlying acre tracts and 
suburban lots, on the other. The large investor was interested in both, 
but wage-earners and clerks were restricted by their purchasing power 
to the cheap-lot market, unless they banded together to form syndi- 
cates. 

The scenes of speculative excitement were first in the territory along 
Madison Street west of Crawford Avenue where the reports of the new 
Cicero and Proviso Electric Line project aroused sudden interest in a 
territory that had been dormant for sixteen years. Then, in the down- 
town area, Dearborn Street which had long been an obscure and 
neglected thoroughfare because it had not been cut through south of 
Monroe Street, received the benefit of the North Side cable loop, and 
under expert pool manipulation made sensational gains in value. The 
climax came when the 2O-by-4O-foot corner of Madison and Dearborn, 
called "the diamond on the shirt front" because it was at the point of 
maximum value, sold for $150,000, or at the rate of $7,500 a front foot, 
the highest price ever paid up to that time in Chicago. The effect of 
this sale was to break the customary level of values, and to convince 
many Chicago owners of central property that they had hitherto under- 
valued their property. The increasing demand for space on State Street 
within two blocks of Madison Street was also pushing values upward 
there. Meanwhile, the rapid growth of the outer edges of the city had 
created a strong demand for acres for subdivision purposes, particularly 
on the Southwest Side, and out of this situation grew up a demand for 
acres on the part of one group of speculators to sell to another group of 
speculators. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 163 

Speculation in acre tracts and subdivision activity. The most charac- 
teristic feature of a real estate boom is the speculation in acre tracts and 
the sale of lots in subdivisions to small investors. A description of this 
phase of the market indicates the widespread interest of all classes of 
people in Chicago lots in 1889, and it also illustrates the unique quali- 
ties of land valuations based on such sales. 

The prices of acre tracts close enough to the city to be suitable for 
subdivision fluctuated from farm-land values to the aggregate value 
they would bring if sold out in lots. Since the marketing of lots in a 
subdivision required an organized sales campaign on the part of a pro- 
fessional subdivider, whose propaganda was chiefly responsible for the 
high level of prices obtained for the lots, as will presently be shown, 
there was usually a wide margin between the selling prices of the land 
in large tracts and the aggregate retail value of the lots which were 
obtained by subdividing it. Often the ratio was three to one and some- 
times it was as high as ten to one. 57 The possibility of a sale to a sub- 
divider at a price low enough to pay him to undertake the work of 
dividing into lots and selling the lots was supposed to set the limit of 
value of an acre tract. As both the suitability of the land for subdivi- 
sion and the retail prices of the lots were determined by no fixed rules, 
acre tracts were in fact subject to extreme fluctuations in values in a 
short time. Sometimes in the excitement of speculation their values 
were carried as high as lots were selling at retail. There being no way of 
calculating their value on an income basis, and as their possible future 
use varied from that of farm land to that of intensive residential or in- 
dustrial use, there was such a wide range of possibilities that the Valua- 
tion Committee of the Chicago Real Estate Board refused to appraise 
them at all. 

Into this speculative field of acre tracts there rushed in 1889 and 1890 
several classes of buyers: (i) the subdivider buying for the purpose of 
cutting the tract into lots and selling the lots at retail; (2) professional 
acre speculators purchasing for the purpose of selling at a profit to other 
acre speculators, to subdividers, or to syndicates of amateur specula- 
tors; (3) groups of professional men or clerks who were buying tracts 
for actual use as homesites; and (4) syndicates of clerks who had pooled 
their savings to buy acre tracts for a resale as a whole or in lots at a 
profit. 

57 This is the increase in the price obtained by the retail sale of a tract over the price 
prevailing in large units and does not include the cost of any street improvements. 



164 ONE HUNDRED YEARS OF LAND VALUES 

There were acre tracts available even in 1889 that would have proved 
profitable investments to any of these classes of buyers. The majority 
of buyers, however, ran in crowds to the spot where the most rapid 
rises were taking place and where land values where highest; 58 and 
that meant in five cases out of six that they purchased on the South 
or Southwest sides instead of on the neglected Northwest Side, where 
land equally distant from the city was only one-third as high. They 
were influenced by the rumors that were circulating everywhere. As 
the real estate editor of the Chicago Tribune phrased it: 

The air is filled with the music of coming improvements. Something important 
is about to happen all around. Almost every quarter section that is between six 
and nine miles of the court house has its remarkable development just ahead. One 
is to be the site of a big manufacturing plant, another is to have car shops, another 
is to have a new railroad, another has all but got the world's fair.*? 

What had been regarded as farm land on the Southwest Side was now 
valued as the potential site of factories or railroad yards. 

Land that a year ago was valued according to its ability to produce crops of corn, 
oats and potatoes is now considered with reference to its location to the Calumet 
terminal, the Stickney tract, the proposed Stock Yards, or any of the other schemes 
to be located in this section. Some say the values are justified by the future pros- 
pects, while others deny that the prices are in any way warranted. 60 

The buying of these acre tracts in 1889, even in the opinion of current 
observers, was frequently reckless and indiscriminate: 

When men, tempted by the reports of advancing prices and not knowing whether 
the advance is genuine and substantial or merely the result of manpulation, rush to 
a map and pick out something for their broker to buy, they are gambling and are 
introducing an unnatural and unhealthy stimulus into the market. Few people, 
for instance, appear to know just what is to be the outcome of the famous Stickney 
purchase southwest of the city, yet because a few people do appear to know and 
have paid high prices in that quarter buyers are rushing thither and making bids 
which would have been grounds months ago for appointment of a commission de 
lunatico inquirendo. 61 

A majority of the purchases were made with a down payment of not 
over one-fourth of the total price, the buyer expecting to sell before he 
was called on for his second payment. The purchasers of acre tracts 
that "had no other qualifications than that it occupied so much space 
on a map of Northern Illinois" and that were far removed from trans- 

& Chicago Tribune, March 17, i88g. 6o Ibid., August 24, 1890. 

^ Ibid., November 17, 1889. 6l Ibid., November 24, 1889. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 165 

portation facilities, as well as the buyers of better-located acres who 
were paying the greatly increased prices, were warned that the whole 
process must finally stop. 

It is perhaps more than likely, whatever the purchase price and whatever the 
property, a market could be found in the next two years which would give the pur- 
chaser of today [May, 1890] a profit. But will that last purchaser be croaking to the 
next generation about the way he was caught back hi '93 ? 62 

Again it was pointed out that it was a dangerous game to pay far more 
than the intrinsic value of the property in the expectation that some- 
one else could be found who would pay still more. 

In the ruins of all collapsed booms is to be found the work of men who bought 
property at prices they knew perfectly well were fictitious, but who were willing to 
pay such prices simply because they knew that some still greater fool could be de- 
pended upon to take the property off their hands and leave them a profit. 63 

Such booms in acre property could collapse as quickly as they were 
generated. In the fall of 1889 there was a lull in the acre market. It 
was declared that "acre values are so full of wind that if any more is 
pumped in the blue arch of heaven will have to be lifted to make room 
for their expansion" and that "present values will not stand the test of 
subdivision." 64 The holders of acre tracts at these inflated values anx- 
iously waited for the spring of 1890 to see whether the furious specula- 
tion would be revived on a larger scale or whether that fatal dulness 
had begun which would render their property unmarketable. To their 
great joy, once more the merry dance of speculation carried the value 
of their holdings to new heights. 

If speculating in acre tracts was a hazardous game for the profession- 
al operator who "had cut his eyeteeth" in the booms in Kansas City or 
Minneapolis two years before, it was particularly dangerous for ama- 
teurs. Early in 1889 thousands of laborers and clerks pooled their 
savings and formed syndicates to purchase suburban acre tracts. 
"Even servant girls, seamstresses and woman clerks have caught the 
fever, put their savings into a lump and become joint owners of sub- 
urban property. Kindled by stories of large profits, they believe it is 
impossible to pay too much." 65 

Their judgment of values was faulty and they were extremely gulli- 
ble. "Amateur acre speculators see millions in swamp lands and cab- 

62 Ibid. , May 4, 1890. 64 Ibid., November 24, 1890. 

., April 13, 1890. ^Ibid., April 21, 1889. 



166 ONE HUNDRED YEARS OF LAND VALUES 

bage fields a mile away from a railroad track." 66 They were easily im- 
posed upon by professional operators, not knowing that the asking 
prices were far above what the property could be secured for by shrewd 
bargainers; and they were easily led to believe they could quickly resell 
the property at a large profit to other speculators or that they could 
subdivide the property and easily obtain the same prices for the lots 
that the big firms received. The real estate editor of the Chicago 
Tribune commented on their inexperience: "It takes the green buyer 
of acres some time to learn that all is considered fair in real estate as in 
love and war," 67 and on the fact that they paid too much for their 
property, "if syndicates pay retail prices for ten or twenty acre tracts 
none but a professional boomer can figure out a profit for them." 68 

Having thus been led to pay too much for their holdings, even in 
terms of the inflated boom prices, when the amateur acre syndicates 
turned to the one-time optimistic operators who had sold them their 
tracts and who had assured them the land could quickly be disposed of 
at a profit, they found that these wily men had now changed their tune. 
The real estate operators who had before expressed such willingness to 
take the acres off their hands at an advance in price had suddenly be- 
come extremely pessimistic about the value of their tracts and gave 
them not the slightest encouragement. 69 When the amateurs next 
sought to convert their land into lots and to realize the same prices that 
were apparently so easily gathered in by the big subdividers, they 
suddenly found that "lots did not sell themselves"; that it required 
great ingenuity, as well as the use of brass bands, fireworks displays, 
large advertisements, excursion trains, and an organized sales campaign 
"to work off" the lots at retail prices. It was not enough to attract 
customers to offer their lots at lower prices with more improvements: 

A small dealer, who has a few hundred lots in a steady going suburb, complains 
that people pass him by and make purchases in Messrs. Whoopla and Bangs new 
prairie subdivision paying $15 a foot for land at a distance from all improvements, 
although his lots, with houses all around them, with sewers and gas and water pipes 
in, were offered at $12 a foot. He can't understand such conduct except on the 
hypothesis that people have lost their heads and are accepting for gospel truth 
everything a dealer tells them so that the biggest liar gets all the trade. 70 

It is little wonder that the amateur syndicates sold very few lots in 
competition with old established firms like S. E. Gross, who had sub- 

66 Ibid., November 17, 1889. M Ibid., April 21, 1889. 

* Ibid., October 6, 1889. <* Ibid. *> Ibid., July 14, 1889. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 167 

divided sixteen towns and who had attracted an extensive clientele of 
investors, many of whom had reaped large profits from his earlier sub- 
divisions. When it is considered that in addition he and other large 
subdividers like E. A. Cummings regularly ran half- or quarter-page 
advertisements in the newspapers, that they operated free excursion 
trains to their properties, gave free lunches, band concerts, fireworks 
displays, and bicycle races to entertain crowds which in the boom days 
of 1889 and 1890 were counted by thousands, it is a matter of no sur- 
prise that concerns operating without these attractions should have 
failed. Nor were the foregoing methods the sole or even the chief 
resource of the large subdivider: 

The successful dealers employ devices and methods unsuspected by the uniniti- 
ated. They do not merely erect a shanty in the subdivision, a branch office with a 
manager on the grounds, put an advertisement in the Sunday papers and wait for 
buyers to come to them. They build the branch office and do the advertising but 
that is only the beginning of their work. They enlist an army of drummers who can- 
vass the city, giving them $5 to $10 commission for every lot sold. These drummers, 
among whom are many women, go diligently through stores, shops and factories 
and they tell wonderful stories about values. Sometimes they profess to be selling 
lots at $100 in neighborhoods where buyers of six months ago are re-selling at $200 
just to close out the subdivision and because the owner is satisfied with a reason- 
able profit. These lot canvassers are the most polite and insidious drummers in the 
field, and have a great advantage over book agents and miscellaneous peddlers. 
They carry no suspicious bundle and easily gain admittance where an ordinary ped- 
dler would be snubbed. It is through them that the largest number of lots is 
sold. 71 

As a result of these tactics the lion's share of the small savings set 
aside to be invested in lots was captured by the large and experienced 
dealer who "blew his trumpet loudly." Nevertheless, the large sub- 
dividers regarded the amateur acre syndicates with animosity, not be- 
cause they were successful in selling lots, but because the members of 
the syndicate would have bought lots of the subdivider if they had not 
entered the syndicate. 

The end linked in this speculative chain, the final consumer, was 
the buyer of lots in the subdivision. High as the value of acre tracts 
was carried in the boom, the purchaser of a 25-foot lot at retail paid for 
his one-tenth of an acre a price that was frequently from three to ten 
times as high as the wholesale price in acres, and in addition he usually 
paid for most of the improvements. "Land in a well known suburb cost 
id., August 25, 1889. 



i68 ONE HUNDRED YEARS OF LAND VALUES 

the owner $200 an acre, he spent as much more on improvements, so 
that the lots cost him $50 each and he sold them for $150 to $300 each 
($1,500 to $3,000 an acre) easily." 72 

In the earlier stages of the rising land market, prior to 1889, a con- 
siderable proportion of these lots was brought for actual use as home- 
sites, in which cases the saving in rent offset the interest lost on the 
capital invested; but in the height of the activity of 1889 and 1890, 
less than 10 per cent of the lots purchased were built upon and the 
main object of the buyer was to sell again at a profit. 

The heavy sales of lots in subdivisions in 1889 and 1890 were due 
to the fact that prosperous times and full employment had placed 
small accumulations of capital in the hands of thousands of persons, 
and that these persons were led by the boom psychology of the period 
and the persuasive tactics of the subdividers to buy a lot on easy pay- 
ments. "North, south, and west the opportunities offered a poor man to 
buy a lot are simply bewildering." 73 Under the urge to buy something, 
and without the experience necessary to appraise the differences be- 
tween different sections of the suburban area, he fell in with the sug- 
gestion of the professional "boomer" that he could not make a mistake 
if he bought a lot anywhere around Chicago. 

All lots about Chicago are good things to buy, some being merely a little better 
than others. This rosy view of lot investments is shared by a large percentage of 
the public, by business men, by clerks, by bank employees, by servant girls, and 
by wage earners generally. They have heard that it is advancing, have seen their 
fellows make profitable deals in the last year or so and are convinced that he who 
buys is sure to win. 7 * 

Consequently the prospective lot purchaser was ready to buy whatever 
was offered by a personal friend or by any dealer who induced him to 
attend an excursion at the right moment. 

The average lot buyer is sadly in need of a counsellor. He buys because a friend 
has bought or because a dealer has treated him to a picnic and assured him that 
prices would be raised all around within a week or because he has suddenly resolved 
to save $5 a week and has often heard it said that nobody makes a mistake when he 
puts money into Chicago dirt. 75 

The result was that he frequently was "danced or whooped into the 
purchase of lots for $10 a foot which current observers predicted would 

7Z Ibid. 

73 Ibid., November 24, 1889. 

""Ibid., July 7, 1889. 7S Ibid., June 30, 1889. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 169 

not support for ten years any improvements more valuable than those 
made by the hoe and spading fork." 76 

The probable aftermath was already being forecast in 1889: 

Conservative men shake their heads and declare that these boom methods will 
be followed by an injurious reaction. People will either find their lots under water 
next spring or discover that they promised to pay more than a fair market price 
and will stop further payments in disgust. Having been bitten once, they will not 
only fight shy of real estate dealers in the future but will warn their friends to be- 
ware of suburban lots. 77 

In addition to a belated discovery that he had paid too much for his 
lot, this small land-buyer was frequently confronted by a special assess- 
ment bill for $300 or $400 to be paid in one lump sum on a lot which he 
was being taxed to the utmost to pay for at the rate of $5.00 or $10 a 
month. 78 If he managed to pay all these sudden charges for improve- 
ments, for which there was no present need, and which were installed 
without his knowledge or consent by some contractor who had received 
a permit from the City Council, the amateur land speculator some- 
times next discovered that on the completion of his final payment to 
the subdivider he could not get a clear and unincumbered lot because 
the subdivider had failed to retire out of the proceeds of his sales a 
blanket mortgage covering the entire subdivision. 

Land in substantially the same locations was thus sold in 1889, as it had 
been before and since, at different prices according to the experience 
or lack of experience of the buyer. It should by no means be inferred 
that all or even a majority of all the lots sold in the boom of 1889 or 1890 
were disposed of in the manner above indicated, nor even that all the 
lots sold by subdividers, even those under water, proved to be eventual- 
ly unprofitable to the buyers. Lots sold in old subdivisions through 
brokerage offices had a more standard and stabilized price, and it was 
this type of lot that was usually bought by business men of greater ex- 
perience and larger resources than the clerical or laboring classes. More- 
over, some of the lots in new subdivisions contiguous to the city proved 
bonanzas. The dangers of such wild and indiscriminate buying of lots 
to the stability of the land market will, however, be disclosed in the 
aftermath of the boom or in the period after 1894. 

As the land boom had thus spread to acre tracts and suburban lots 
during 1889, it had also seized upon central business property. Invest- 

76 Ibid., July 7, 1889. 77 Ibid. 78 Ibid., April 13, 1890. 



iyo ONE HUNDRED YEARS OF LAND VALUES 

ors by the score were bidding for downtown property, 79 but asking 
prices were constantly being advanced to keep ahead of the advancing 
offers and late in September it was stated that 75 per cent of the prop- 
erty in the heart of the city was out of the market. 80 

Buyers far outnumber sellers. A buyer wastes time if he goes around trying to 
purchase property at prices asked last spring, last summer or last month. Owners' 
ideas of values are apt to change each week and their ideas are always moving up- 
ward. Owners have been approached by so many brokers with bids and with pro- 
posals for leases that they feel independent, perfectly confident of their ability to 
sell at terms which would have seemed impossible a year ago. The enthusiasm of 
buyers has made owners optimistic in the highest degree, and negotiations for large 
pieces are dragging in consequence of bids always being a little under asking prices. 81 

Since business and office rents had not advanced, there seemed to be 
no basis for such increased values. "It is generally admitted that 
pieces of real estate have sold this year for amounts much above what 
is warranted by the present income received from them, and in several 
cases above what they can be made to yield immediately by the best 
possible impovements." 82 

Buyers in the immediate past who had bought central business prop- 
erty without stopping to reason about it, however, had profited, while 
those who had made careful calculations had failed to gain, so head- 
long and unreasoning optimism seemed the better policy. "Buyers 
have banked on the future of Chicago. This has been a safe and paying 
thing to do during the last half dozen years." 83 

The entire Chicago area, however, did not participate in this upward 
movement, as it did in the case of the earlier booms. "The amount of 
Chicago property is too great to be stirred by any speculative whirl- 
wind. Chicago still has its booms, but they are confined to districts, to 
special classes of property, to limited areas." 84 

Residential property in old sections of the city, for instance, was a 
drug on the market. 85 The near West Side was not only not having a 
boom, but its land values in the region west of Halsted Street to Ash- 
land Avenue from Grand Avenue to Madison Street were lower than 
they were twenty years before. Acre tracts on the North and North- 
west sides had advanced only moderately in price, and were being 

"Ibid., September 29, 1889. 

80 Ibid., September 22, 1889. ^ Ibid. 

81 Ibid., October 13, 1889. ** Ibid., September 8, 1889. 

82 Ibid., August 18, 1889. ** Ibid., September 29, 1889. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 171 

offered for sale at what a few years later were regarded as bargain 
rates. 

Ignoring these dead spots, the year 1889 closed with a rush of busi- 
ness that was carried over into the usually dull Christmas holiday 
season. 86 The aggregate sales of real estate as shown by the recorded 
transfers $i35,8oo,ooo 87 had broken all previous records; and even 
this figure understated the case, for it did not include the large volume 
of sales of subdivision lots made on instalment contracts. The number 
of lots subdivided in Cook County 39,997 also set a new record. 
Projected skyscrapers, elevated railroads, belt lines, manufacturing 
towns, and the World's Fair took shape in the minds of the public and 
gave a rosy tint to their hopes. 

The culmination of the boom, 1890. The year 1890 fulfilled at its peak 
period the most fervent hopes of the land speculators. The World's 
Fair was awarded to Chicago by Congress on February 25, 1890. 
Land values near Jackson Park advanced as much as i ,000 per cent in 
the year, as tracts partly under water south of the park were bid up 
from $600 to $6,000 and even $15,000 an acre. 88 The acre speculation 
around the Stickney tract and from Forty-seventh to Ninety-fifth 
Street from Western to Harlem avenues carried acre tracts to double 
and triple their former apparently inflated values. The sale of lots sur- 
passed all previous records. S. E. Gross was selling as many as five 
hundred lots a week, and on one of his free excursions to his subdivi- 
sion Grossdale, west of Chicago, twenty-seven coaches pulled by two 
engines were required to transport the three thousand people who were 
eager to buy lots. 89 Five times as many manufacturers located in 
Chicago in 1890 as in any single year before, and the sale of acres and 
lots near the site of actual or projected factories was at fever heat. 
The "Alley Elevated" road was being constructed between State and 
Wabash Avenue with the result that the value of State Street frontage 
from Twenty-second to Sixty-third streets increased several hundred 
per cent in a few months. Projects for hotels and apartments for the 
World's Fair were sending up the value not only of Michigan Avenue 
near Twenty-second Street but of property all over the South Side. 
"It is a poor neglected corner of the South Side that does not have its 
hotel scheme." 90 The skyscrapers planned for the downtown office sec- 

86 Ibid., December 29, 1889. 88 Ibid., May 25, 1890. 

87 Ibid., January i, 1890. * 9 Ibid., June 15, 1890. * Ibid., April 9, 1890. 



i 7 2 ONE HUNDRED YEARS OF LAND VALUES 

tions, and sales or leases for projected buildings, kept values jumping. 
State Street, with seventy-five hundred people passing hourly from 
Madison to Monroe Street, was at a greater premium than ever before, 
and those who had a store within two blocks of State and Madison 
Street found that the very force of their location inevitably attracted 
a great trade, while those who moved away in the hope that their 
customers would follow them into the next block were glad to pay a 
bonus to get back. The owners of Wabash Avenue property were look- 
ing to the South Side Elevated Railroad, then having its projected 
terminus at Wabash and Congress street, as "the Moses that would 
lead them out of the wilderness." Property along Michigan Avenue 
south of Madison Street had come into great demand for hotel purposes, 
especially after the completion of the Auditorium in 1889, because of its 
freedom from the heavy traffic of the downtown area, and its values 
had risen to an amazing degree. The wholesale quarter southwest of 
Jackson and Wells Street was building up rapidly. On the West Side 
speculators were buying land west of Halsted and Jackson streets in the 
expectation that the light manufacturing district would spread west- 
ward. The new cable line on Madison Street to Crawford was infus- 
ing some activity into that street. Northward, the rise of the Lake 
Shore Drive and the streets adjacent to it to a position of social emi- 
nence and of high land values was now an accomplished fact. The com- 
pletion of the new Sheridan Road to Waukegan had also stimulated 
activity along the North Shore. 

In the general rush and feverish scramble in so many sections of the 
city and the surrounding suburbs, the seven thousand vacant houses in 
the near West Side were lightly passed by. In the favorite scenes of 
speculative activity, sales were made so fast that half-a-dozen transfers 
of contracts to purchase were sometimes made before one deed was 
recorded. Buyers were in such a hurry to get the property that they 
neglected many formalities of title examination. In the general excite- 
ment there was much sharp dealing bordering on actual fraud. Taking 
advantage of the faith and confidence of the public in the accuracy of 
the considerations expressed in the deeds of conveyance which were 
recorded and published in the newspapers, sales were made in many 
cases at fictitious considerations to dummy buyers for the purpose of 
creating the impression of activity and advancing prices. The ruse was 
frequently successful, as buyers rushed to any spot that appeared to be 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 173 

going up in value. Again there were many cases of "scalping" un- 
noticed at the time but the details of which came out in the aftermath 
of the boom. Some of the unscrupulous "curbstone" brokers, who had 
been attracted to Chicago by the boom, sometimes contrived to make 
more than a regular commission by selling the property intrusted to 
them at a higher price than was paid to the owner and by keeping the 
difference. Again there were cases of property being sold at an abnor- 
mally high price on the strength of a fictitious lease, by which an irre- 
sponsible confederate of the seller agreed to pay an unusually high rent 
for the property. 

Such were the components of the real estate market of Chicago of 
1890. Good and bad elements were hopelessly mixed together and 
anyone was regarded as a traitor to Chicago who questioned any part 
of the process that was making so many people rich. The apex of the 
boom was reached in June, July, and August, when the volume of 
weekly and monthly sales broke all past records. At last, in early Sep- 
tember, there came the report that Washington Park might be used for 
the World's Fair, whereupon buyers on options and most slender mar- 
gins undertook to boost the prices of Cottage Grove Avenue frontage 
from Forty-ninth to Sixtieth streets from $100 to $200 to $300 to $500 
a front foot. 

This proved to be the last phase of the boom. The failure of the 
Baring Brothers in London precipitated a serious financial stringency 
in September. The banks suddenly refused to make loans for the pur- 
pose of purchasing real estate, although the borrower was allowed 
funds for other uses. "The blandishments of real estate agents fall 
pointless against a stringent money market," was the current comment 
in September. By November there was a financial panic. The Wash- 
ington Park boom had collapsed in October and the effect of a fall of 
"300 per cent" in values there, as one naive statistician put it, had a 
chilling effect on the hitherto confident belief that the boom values 
would not decline. By December there was no active real estate mar- 
ket in the sense that speculation was active. "Sales have come to a 
sharp halt. Negotiations even are silenced." 91 

At the close of the year, the situation was reviewed in which annual 
sales in Cook County had reached the record-breaking total of $237,- 
83i,ooo, 92 in which 40,000 lots 93 had been subdivided and a considerable 

91 Ibid., December 7, 1890. " 2 Ibid., January i, 1891. Ibid., September 21, 1890. 



174 ONE HUNDRED YEARS OF LAND VALUES 

proportion of them sold in the first six months of the year, in which single 
firms like Snow and Dickinson had sold $7,500,000 worth of property, 
and in which all brokers, even those of the curbstone variety, had made 
money. The fortunes made by some read like romances. Notwith- 
standing the sharp check in operations beginning in September, there 
was still a confident belief that activity would revive in the spring of 
1891. If general business conditions did not improve, Chicago at least, 
on account of its coming World's Fair, was expected to be a bright ex- 
ception to conditions elsewhere. 94 Great store was placed on remarks 
by Chauncey Depew as to the vast amount of money the Fair would 
put in circulation in Chicago. Consequently, while considerable anx- 
iety was felt by the purchasers of tracts aggregating thousands of 
acres as to whether they would be able to sell their holdings before the 
next payment came due, 95 there were no reductions in asking prices, and 
holders of improved property were even more confident. 

The gains in land value from the beginning of 1889 to the beginning 
of 1891 had been far greater than in the preceding six years, particu- 
larly in the case of central business property and first-class residential 
property made accessible by fast transportation, but the value of land 
occupied by cheap homes had declined because of the increased com- 
petition of suburban land. Table VII, the data for which were pre- 
pared by Frank R. Chandler, indicates the percentage of change for 
different types of property. 96 

It will be seen that cheap houses are cheaper now than ten years ago. So they 
are, because more land has been brought into requisition, also that property under 
the head of office buildings is as high as the best retail business. This is the result 
of high buildings mainly. First class residence property 4^ miles out is just as de- 
sirable as property three miles out. This is due to improved transit facilities and 
the rapid growth and extension of the business districts. The average increase in 
values since 1889 approximately given is from 100 to 200 per cent and in exceptional 
cases an increase of 300 to 400 per cent has been made. 

The beginning of the lull, 1891. The real estate speculators discov- 
ered in 1891 that checking the boom of 1890 in mid-career had changed 
the temper of the market and that the one-time buoyant optimism 
could not be revived. 

94 Ibid., December 7, 1890. 9S Ibid., September 14, 1890. 

*> Real Estate and Building Journal, April 4, 1891. Since the figures for 1879 are average 
and not maximum values, the lower figures for 1891 are taken in computing the percentage 
of increase. This minimizes the extent of the actual advance. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 175 



No train of transactions will be brought to an absolute halt by unfavorable 
events as quickly as real estate transactions. The financial disturbances of last fall 
stopped almost completely for a time these speculative operations. The influence of 
that crisis has nearly departed, but it left the country in a far different temper from 
that of a year ago. The sanguine optimists have become conservative. So long as 
there is a speedy turning over of property at advancing values the speculative real 
estate operator has little thought of the point prices have reached. When that 
movement has stopped for a time and holders of property whose equity is repre- 
sented by only a narrow margin have exhausted themselves in searching for a buyer, 
it is not only discouraging to see how slow it is to market a piece of realty, but their 
fate warns other men. 97 

TABLE VII 
VALUE OF CHICAGO LAND BY PRINCIPAL USES, 1879-91 



CLASS OF PROPERTY 


DOLLARS PER FRONT FOOT 


PERCENT- 
AGE OF 
INCREASE 
1879-91 


Jan. i, 1891 


Jan. i, 

1889 


Jan. i, 
1883 


Jan. i, 
1879 


First-class retail, central 


$7, ooo-$ 10,000 
7,000- 10,000 
2 , ooo- 5 , ooo 
600- i , ooo 

800- 1,000 
250- 400 
250- 400 
250- 400 

125- 300 
450- 600 

350- 450 
7- 20 
75- loo 


$4,000 
3,000 
2,000 
600 

800 
200 
175 
150 

125 
250 

500 
25 
85 


$1,500 
2,OOO 
1,500 
400 

600 

ISO 
125 
IOO 

80 

2OO 

400 
2O 
60 


$1,500 
I, IOO 

600 
300 

250 

95 
70 
75 
60 

IOO 

250 

IO 

40 


367 
536 
233 

IOO 
220 
I6 3 
257 
233 

108 
350 

40 
decrease 
90 


Banks and offices 


Wholesale business 


Local business centers 


Aristocratic residence, South 
Side 


First-class residence, South 
Side, 3 miles 
First-class residence, South 
Side 3^ miles 


First-class residence, South 
Side, 4 miles . .... 


First-class residence, South 
Side, 4! miles 


First-class residence, West Side 
Aristocratic residence, North 
Side 


Cheap homes 


Fashionable suburban 



Farming lands, Cook and DuPage counties, $2oo-$i,ooo and $2,000 an acre. 

A large number of people had now purchased real estate which they 
could not sell, and that required further outlay on their part to keep up 
the payments of principal and interest as well as of taxes and assess- 
ments. The funds available for purchasing more property were thus 
curtailed, and they were further reduced by a decline in the number 
employed in manufactures and the falling-off in business profits. 
Potential buyers, seeing that land near the World's Fair ground and the 

97 Chicago Tribune, May 17, 1891. 



176 ONE HUNDRED YEARS OF LAND VALUES 

Alley Elevated that people rushed to buy in 1890 could still be bought 
at no material advance, were now in no hurry to make commitments. 98 
Announcements of new projects and even the completion of many 
enterprises had lost their potency to stampede the buyers. "The an- 
nouncement of enterprises and negotiations under way which would 
have caused a sensation during the summer of 1890 was received in 
1891 without causing the slightest stir in realty circles." 99 Buyers now 
took more time in examining abstracts, and they were careful to look 
into all phases of the deal, as the buyers of 1890 were indulging in re- 
criminations and complaints about scalping and imperfections in their 
titles. Land values were nominally higher than ever, and the volume 
of recorded sales was not far below the peak level of 1890, but this ap- 
pearance was deceptive. There were many exchanges of property at 
inflated considerations in which two parties, unable to sell their hold- 
ings for cash, traded with each other at abnormally high considerations 
on both sides. It was further estimated that as much as half of the 
deeds recorded in 1891 were the result of deals made in 1890 which 
involved the carrying-out of contracts made in the earlier year. 100 

As yet there were few signs of actual decline in values. The pur- 
chasers of acres and lots were still struggling to keep up their payments, 
and if they could not pay these sums promptly, they found their cred- 
itors lenient; for the former owners did not want the property back, and 
they knew that under the foreclosure law it would take them eighteen 
months to secure the title and to wipe out the equity of the mort- 
gagor. 101 

Some of the speculative bubbles had already been pricked. The 
Stickney acres were in ill repute; the projected removal of the packing 
plants to Tolleston was now referred to as a fiasco. 102 Acre tracts were 
a drug on the market, an inquiry for one such tract bringing in eighty 
replies and offering a total of 2,500 acres, half of which was located in 
new manufacturing towns such as Harvey, Hammond, Stickney, 
Chicago Heights, South Chicago, and Wireton Park. 103 The sale of lots 
in subdivisions had decreased drastically. S. E. Gross sold only 129 lots 
during the week ending July 26, 1891, as compared with 529 for the 
same week a year before. 104 In one case where a dozen carloads of 

**Ibid., June 28, 1891. I01 Ibid., May 3, 1891. 

"Ibid., July 30, 1893. I02 lbid., August 23, 1891. 

100 Ibid., June 7, 1891. 1( * Ibid., July 26, 1891. I0 i Ibid. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 177 

prospective purchasers were taken to a South Side subdivision under 
conditions that would have insured the sale of hundreds of lots in 1890, 
only a few lots were sold. 105 There were too many agents trying to make 
deals, with the result that the commissions were split up among too 
many to be profitable to any one. Many negotiations were broken off 
because "a friend of one of the parties" to a deal who was in the real 
estate business advised against it in order to promote a sale of his 
own. 106 

Notwithstanding these drawbacks, many sales were negotiated in 
1891, but they were for actual use rather than for speculative resale. 
Purchases were made downtown for sites for sixteen-story buildings, 
and on the South Side for apartment or hotel sites. 

Despite the decline in the sales of subdivision lots, the number of 
lots subdivided in 1891 in Cook County far exceeded all previous rec- 
ords with a total of m,ooo. 107 Only a small percentage of this number 
was sold. The volume of building activity, augmented by the erection 
of skyscrapers and the building of apartments and hotels on the South 
Side for the World's Fair, also reached a new peak, having increased 
from a total of $25,000,000 in 1889 to over $47,000,000 in 1890 and 
$54,000,000 in 1891. Those who had purchased land at high valuations 
were persuaded to build in order to earn something on their invest- 
ment. Others were induced to erect buildings under the most extrava- 
gant notions as to the income they would yield during the World's 
Fair. One advertisement contained the assuring estimate that four 
rooms in an ordinary six-room house would earn $5,760 in the six 
months of the Fair. 108 

This building activity reached a new peak in 1892, when the total 
volume amounted to $63,463,4oo. 109 Wages and materials costs were 
forced upward 20-25 per cent 110 under this intense demand combined 
with the demand created by the construction of the Fair buildings, so 
that the buildings of this year were erected at an abnormally high cost. 

IO *Ibid., July 5, 1891. Io6 Ibid., July 19, 1891. 

107 Computation of the editor of the Real Estate and Building Journal, June 9, 1894. 
Another authority gave a total of 79,803 for Cook County and 115,892 for the Chicago 
Metropolitan Region in 1891. 

108 Chicago Tribune, April n, 1891. Advertisement of E. A. Cummings of house at 
Forty-first and Ellis Avenue. 

109 Annual reviews of the Economist (1891-97). 

110 Chicago Tribune, November 13, 1892. 



i 7 8 ONE HUNDRED YEARS OF LAND VALUES 

Speculation in ninety-nine-year leases as a prelude to the erection of 
skyscrapers and hotels also reached a peak in 1892, the value of prop- 
erty so leased amounting to $12,000,000 as compared with $10,000,000 
in 1890 and $8,700,000 in 1891. *" 

The market of 1892 was thus partly sustained by record-breaking 
building activity, by speculation in downtown leases in which certain 
operators leased whole floors and sublet them at a profit, by the con- 
struction of the Alley Elevated Railroad, and by the plans for the 
Metropolitan Elevated Railroad on the West Side. The organization 
of the University of Chicago also exerted an influence on the real 
estate market: first, because the section selected by the professors for 
their homes was expected to create a choice residential center that 
would be fashionable because of its aristocracy of learning; 112 and, sec- 
ond, because the announced plan of the trustees to invest part of the 
endowment of the University in property in the central business 
district enhanced the investment prestige of that territory. 113 On the 
whole, however, even with these favorable factors, land values in the 
centers that had been whirlwinds of activity in 1890 were drifting 
toward complete stagnation." 4 The collapse of the cheap-lot mar- 
ket and the failure of the great schemes for railroad yards and manu- 
facturing plants had almost destroyed the cash market for acre tracts." 5 
The number of lots subdivided fell from 110,000 in 1891 to 65,000 in 
1892. In the downtown section the supply of office space was being 
increased faster than the demand. Foreclosures, while still few, were 
increasing in number. 

The onset of the panic, 1893. The year when the World's Fair opened 
was also the year of the panic of 1893. The prospect at the beginning 
of the year was none too bright, but when the belated World's Fair 
guests failed to fill the hotels that were built for their reception and when 
they failed to respond to invitations to inspect real estate, the Chicago 
land market was in the dumps even when the Midway and the Court 
of Honor were packed with dense throngs. The peak values were still 
maintained, and there was no break in prices because a scaling-down 
of prices did not attract many buyers." 6 There was a great difference 
between the bid and asked prices, the owners not being inclined to 

' Ibid. " 4 Ibid., September 25, 1892. 

113 Ibid., October 30, 1892. s Ibid. 

"3 Ibid., December 4, 1892. 6 Ibid., July 30, 1893. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 179 

make sacrifices and the purchasers looking for bargains. 117 "The whole 
city practically is for sale but not at bargain counter prices."" 8 

The last six months of 1893 were far worse than the first half of the 
year. When the World's Fair crowds departed, the almost empty flats 
and hotels near the grounds quickly passed into the hands of receivers, 
and as rents were cut sharply to attract tenants, the overbuilt condi- 
tion of the city as regards flats was emphasized. The rapid increase in 
unemployment, as factories curtailed operations and as the volume of 
building dropped from over sixty-three to twenty-eight million dollars, 
forced people to double up in their living quarters. The termination of 
World Fair projects, and the contraction of firms into smaller quarters 
reduced the demand for office space at the very time when its supply 
was being greatly increased by the completion of a number of new 
skyscrapers. 

There were bright spots in the picture, however. Store rents on 
State Street near Madison had trebled since 1889 and land values 
throughout the central business district showed no inclination to de- 
cline. While the prices of lots on Grand and Drexel boulevards from 
Thirty-ninth to Fifty-first Street were cut in a few instances to raise 
cash during the panic, this reaction was but temporary; and, under the 
influence of the building of many fine homes along these thoroughfares, 
land values had increased from 25 to 75 per cent over 1890 prices by 
1895. The North and Northwest sides scarcely felt the depression, for 
their boom was only about to begin. The depression particularly affect- 
ed those portions of the South and Southwest sides where speculation 
had been most intense in 1890. The panic of 1893 marked the begin- 
ning of the passing of the South Side as the leader of fashion and of real 
estate speculation. 

The condition of the scenes of speculative excitement of 1890 
steadily grew worse from 1894 to 1898. In 1894 the first drastic cuts in 
real estate selling prices were made when weak holders accepted a 30 
per cent reduction from the prices of 1890 for lots on South Side ave- 
nues." 9 Real estate values were apparently being maintained in 1895 
when there was a brief recovery in general business conditions, but a 
majority of the recorded transfers were said to be masters' sales or 

"i Ibid., July 9, 1893. 

118 Ibid., July 2, 1893. 

119 Real Estate and Building Journal, August 25, 1894. 



iSo ONE HUNDRED YEARS OF LAND VALUES 

sales to avoid foreclosure. 120 However, another panic on the stock 
market late in 1895 intensified the depression in real estate by 1896, 
particularly that in vacant lots. At last there were no more excursions 
to take prospective lot-buyers to subdivisions. 121 "The demand for 
vacant property is at the lowest ebb in the history of the city. Nine out 
of the dealers in suburban property said there was absolutely nothing 
doing and there was no indication of a demand for vacant lots." 122 By 
this time a majority of the buyers of lots on easy payments had lost 
their holdings and had nothing to show for their investment. "Other 
real estate dealers said that in some localities two-thirds and perhaps 
three-fourths of the lots sold in good times had been sold on fore- 
closure and that nine- tenth of the cheap lots sold on easy payments had 
been sold for taxes and special assessments." 123 

In 1896 taxes had been increased 33-50 per cent 124 and this burden 
was most inequitably distributed as between persons and districts, as- 
sessed values varying from 4 to 64 per cent of true value in the central 
business district 125 and in other cases ranging from i to 100 per cent of 
true value. The method of allowing contractors to instal improvements 
to be paid for by special assessments in any territory in which they 
could secure the consent of the City Council had resulted in evils that 
were a constant source of complaint. Sidewalks were built where there 
was no one to walk on them, and water pipes were extended to sections 
where there were only one or two families to the mile. 126 A thousand 
boulevard lamps were erected in the swamps of the Calumet region. 
It is little wonder that the weight of such burdens had crushed the 
small-lot purchasers and that the number of lots subdivided de- 
clined from 111,000 in 1891 to 3,500 in 1898. 

By 1896 real estate was in such a dull and disorganized condition 
that land values were difficult if not impossible to determine in many 
cases. "In the absence of sales enough to show a demand for real estate, 
the market must be a mere matter of opinion and when it gets so dull 
that a majority of the agents say that they cannot even hazard an 

120 Ibid., November 16, 1895. 

121 Ibid., June 6, 1896. 

122 Ibid., November 21, 1896. I2 ' Ibid. 
I2 < Ibid., May 30, 1896. 

125 Ibid., May 9, 1896 (Mayor Swift's Tax Commission report). 

126 Ibid., August i, 1896. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 181 

opinion, it is certainly very quiet." 127 The morale of the once optimistic 
real estate brokers had declined to a very low ebb and their talk now 
discouraged prospective customers. "By far the most hurtful of all are 
the depressed feeling and discouraging talk of the brokers. Many of 
them are disheartened and some of them are in straightened circum- 
stances." 128 The volume of recorded sales did not indicate that there 
was any real activity in the market, for "some estimate that not more 
than one-third of the transfers reported are entitled to be considered 
as a result of a demand for real estate, the other two-thirds being 
credited to exchanges, liquidations of debts, etc." 129 

The worst point in the depression was not reached in 1896, however, 
for in 1897 it was said that "real estate is a liability instead of an asset" 
and that it had declined 25 per cent in value during the year. 130 Fore- 
closures as indicated by the judicial sales at the Chicago Real Estate 
Board were increasing every year and did not reach their peak until 
1898, as the Table VIII shows. 131 

TABLE VIII 

VALUE OF PROPERTIES SOLD AT JUDICIAL SALES IN CHICAGO, 1892-99 

1892 (beginning May i). . $2,537,262 1896 $10,697,288 

1893 4,182,603 1897 13,380,240 

1894 6,967,192 1898 13,609,858 

1895 8,256,527 1899 11,821,711 

During this very period of intense depression, however, an improve- 
ment was taking place in the transit facilities of the central business 
district and of the West and North sides that was to have both an im- 
mediate and an ultimate effect on their land values. These influences 
must now be considered. 

F. NEW TRANSPORTATION LINES, 1894-98 

The period from 1894 to 1898 was marked by the building of many 
new transportation lines, both elevated railroads and electric surface 
lines, on the North and West sides. The Lake Street elevated railroad, 
which had begun operation on the West Side late in 1893, was extended 
from Market Street to State Street in October, 1894. The Metropolitan 
elevated made rapid progress in 1895, the. Garfield Park branch being 

"ilbid. 

J2 *Ibid., May 16, 1896. w Ibid., June 12, 1897. 

129 Ibid. I31 Annual review in the Economist (1900). 



182 ONE HUNDRED YEARS OF LAND VALUES 

completed from Franklin to Cicero Avenue, the Logan Square branch 
finished to Logan Square, the Humboldt Park branch built to Lawn- 
dale Avenue, and the Douglas Park branch constructed to Eighteenth 
Street. 132 The route of the Northwestern Elevated Railroad line was 
surveyed to Wilson Avenue in 1893 and construction was begun in 
i8g6. 133 In 1895 an d 1896 many new electric surface lines were built 
on the North and Northwest sides, particularly on Belmont, Irving 
Park, and Lawrence avenues, and territory that had the worst trans- 
portation before now secured the best. A rapid conversion of horse- 
car lines into electric- trolley systems was also taking place in these 
years until in 1897 the South Side surface lines had only 7.5 miles of 
horse-car lines compared with 141.5 miles of electric and 30 miles of 
cable lines, and the West Side lines had only 6.5 miles of horse-car lines 
compared with 165.5 miles of electric and 30 miles of cable lines. 134 
The promises of improved transportation made in the boom of 1890 
had been fulfilled, but the actual construction of the new lines did not 
produce the effect on land values in the depressed market from 1894 to 
1898 that the mere promises of such facilities had exerted on the ex- 
cited land market of 1890. Mr. Yerkes, who was promoting the North 
Side lines, was however, even in 1895, forming syndicates to purchase 
land along the route of the new electric surface lines; and the new means 
of electric transit both surface and elevated were to exert a marked 
influence on the rise in land values on the North and Northwest sides in 
the next few decades. 

Meanwhile, the location of the downtown termini of the three ele- 
vated lines already constructed the South Side elevated line, the 
Metropolitan elevated, the Lake Street elevated, and the projected 
Northwestern elevated was in 1895 exerting a powerful influence on 
the values of land in the central business district. The new elevated 
roads were carrying passengers into the downtown area to shop who 
had formerly patronized stores on West Madison Street, Twenty-second 
Street, and Milwaukee Avenue. Rents of stores on these streets were 

133 Statement of J. V. Sullivan, assistant to the president, Chicago Surface Lines, to the 
writer in 1932. 

133 Emil Rudolph, who surveyed the route, in a statement to the writer in August, 1933, 
said that he was instrumental in selecting the route that was followed, as he persuaded 
Lauderback not to construct the line to Lincoln Park but to tap the territory farther west 
that lacked transportation facilities. 

134 Statement of J. V. Sullivan to the writer in 1932. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 183 

lower in 1895 than in 1889 while on State Street near Madison Street 
business rents had tripled. The exact route of each of these lines into 
the downtown area was a matter of great concern to owners of land on 
the various streets in that section. When the Lake Street elevated was 
finally extended to State Street, it was found that the thirty to forty 
thousand passengers poured daily from the stations at Wells, Clark, 
and State streets greatly increased the business of the stores on these 
streets running at right angles to Lake Street, but that they did not 
stop at all at the inside stores on Lake Street, which were therefore 
injured by the noise of the elevated structure without receiving any 
benefit in return. 135 Some of the owners of the Wabash Avenue prop- 
erty were therefore inclined to oppose the extension of the South Side 
elevated lines from Congress Street north to Lake Street, but there 
were others at the north end of Wabash Avenue who were anxious to 
secure the benefit of the traffic that was poured out at Congress Street, 
so the consent of the property owners was finally obtained. Instead of 
each elevated line constructing its own loop in the downtown area, as 
was first proposed, plans for a union loop were considered in 1895. 
Several possible routes were discussed, some contemplating elevated 
lines as far east as Michigan Avenue and as far west as Franklin Street. 
The building of lines that could be used for two sides of the Loop on 
Lake Street and Wabash Avenue was followed by the construction of 
the Van Buren and Wells Street sides. On October 12, 1897, the 
Union Loop was opened. The benefit was so pronounced to the prop- 
erty lying within the Loop that "the Loop" became a synonym for the 
high- value zone or the central business district of Chicago, while prop- 
erty owners outside the golden circle "cursed the Loop as a Chinese 
Wall that stopped the natural expansion of the central business area. 
Meanwhile, a cable line on Blue Island Avenue that entered the down- 
town area through a tunnel on Van Buren Street had after 1894 been 
a large factor in promoting activity in the south end of the central 
business district. 

The construction of the new elevated lines and the completion of the 
Union Loop so increased the business of retail merchants on State Street 
that there was no decline but even a slight advance in land values along 
State Street during this period of otherwise extreme depression. In fact, 
a new high record for land values was made in 1896 when the corner of 

Real Estate and Building Journal, December 7, 1895. 



184 ONE HUNDRED YEARS OF LAND VALUES 

State and Madison was leased for $50,000 a year only slightly less 
than was paid for the entire corner seventeen years before. This sale 
established a value of $18,000 a front foot for this peak-value corner 
of Chicago. 

While land values in all parts of the central business districts were 
firmly maintained, the effect of the depression was felt here as well as 
in the suburban areas of the South Side. Most of the speculators in 
business leases were forced into bankruptcy by 1897, for they had con- 
tracted to pay higher rent than the stores could be made to pay. The 
"fad" of constructing high office buildings was overdone by 1894. A 
considerable number of the new skyscrapers started in prosperous 
times were not ready for occupancy until after the panic of 1893. 
Office rents were greatly reduced, agents scoured the streets for ten- 
ants, tenants were allowed to stay who were unable to pay their rents, 
and still a considerable proportion of the space in the new buildings 
remained vacant. 136 Under these conditions, many of these buildings 
did not yield enough income to pay their operating expenses, fixed 
charges, and ground rent, and new capital for erecting more sky- 
scrapers was not available. 137 Instead of the urge to erect new tall 
buildings, the emphasis was now placed on the science of successful 
management of those already erected. 138 

G. SUMMARY OF THE TREND OF CHICAGO LAND 
VALUES, 1877-98 

The aggregate value of the land in the 211 square miles of the present 
city limits of Chicago having declined from $575,000,000 in the peak 
reached before the panic of 1873 to approximately $250,000,000 in 
1877, the brisk recovery beginning in 1879 had brought this aggregate 
back to $485,000,000 by the end of 1882. A period of equilibrium then 
followed in which land values remained almost stationary until 1886, 
when they began to rise slowly, until by the end of 1888 this aggregate 
amounted to approximately $650,000,000. In the extraordinary boom 
of 1889 and 1890, in spite of the failure of land values to advance 
in the residential belt of the old city, and only a moderate increase in 
land prices on the Northwest Side, the rise in values on the South Side 
and the central business district was so great that the average gain for 
the entire city was over 100 per cent in less than two years, bringing the 

136 Chicago Tribune, February 4, 1894. 

id., April 15, 1894. ^ Ibid., April 22, 1894. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 185 

aggregate value of the 211 square miles in the present city limits of 
Chicago to $1,500,000,000. In the period of dulness that began in 1891 
and the drastic depression that ensued after the panic of 1893, this 
aggregate declined to only $1,000,000,000 by 1898, a smaller percentage 
of decline than in any previous depression, because land values on the 
North Side and the central business district were holding firm or ad- 
vancing during the deflation on the South Side. The South Side, where 
the value of land south of Twelfth Street, east and south of the Chicago 
River, and the Illinois-Michigan Canal had in 1890 surpassed that of 
the North and West sides combined, was rapidly losing its lead to the 
North Side from 1893 to 1897 because of the after- the-Fair reaction, 
the beginning of the shift in the fashionable residence section north- 
ward to the Lake Shore Drive, and the rapid improvement of the trans- 
it facilities of the North and Northwest sides. 

The central business section. Average front-foot land values in the 
section bounded by the lake, the main and south branches of the 
Chicago River, and Van Buren Street increased from $1,000 in 1873 
and $500 in 1877 to $4,000 in 1891-92. The aggregate land value of 
$288,000,000 for the 72,000 front feet in this district obtained from 
actual sales is corroborated by the report of the Tax Commission in 
i896. 139 Their valuations, made separately for each parcel in the central 
business district except tax-exempt property, when added together with 
an estimated value for the exempt tracts give practically the same re- 
sult. Since there were no appreciable changes in average land values 
in the central business district from 1892 to 1896, a rise of 700 per cent 
in downtown land values from 1877 to 1892 is clearly indicated. This 
remarkable gain in property that was yielding an income all the time 
in most cases was due to a number of factors, most important of which 
were the skyscrapers, permitting a more intensive use of office-building 
sites, the increased volume of trade brought to the downtown area by 
the cable and elevated loops which in turn greatly increased the rents 
on the best retail streets, particularly State Street near Madison Street, 
and a decline in interest and capitalization rates until central business 
property which yielded a net return of from 10 to 30 per cent on the 
selling value of 1872 yielded only from 2 to 5 per cent on the selling 
values of 1892. 

139 See Economist, May 16, 1896, supplement. See Figs. 72 and 74 for land values in the 
central business district of Chicago for 1894-96. 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES PER FRONT FOOT 
1892 



FRONT FOOT VALUES IN DOLLARS 

fHH 100 AND OVER 
50 TO 99 
26 TO 49 
4 TO 25 



BASED ON RECORDS OF ACTUAL SALES 



PREPARED BY HOMER HOYT 



ig^l llil:lle ::i:::il!:?HiSi 




FIG. 26 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES- I 892 

AVERAGE VALUES FOR SQUARE MILE AND 960 ACRE TRACTS IN DOLLAR PER ACRE 

SOURCE 1 ACTUAL SALES 



400 i 400 i 400^x500 i 2006^000 

' v ' ' 



QOb^ SOO^ 500 j 500 jIOOO;2500 il7500 



v 

'Q.^ 1000 s i 1500 i 3730 j ^500 i 



1000 ; 2000 '; 3000.^ 3500 ^&too ; io,oooj 



3 -??-J 5 .9j 8 . - ?~ 

7000 :io,50o[ |5I-';i9joooi30 1 op6;40joob/ 
-J ,-";!8,500; ! ,' ; / 2 



200a-J2500 j 3000 13000 j 1 i pH ^V 

4- -! -! \ i- f I ? [ -I- -\sssTactr 

U ^^~^ 



1500 j 2000 i 3000i; 3500 | 4000 15000 j f^T-f i ^ 



*' I / ! 5000 TSOO^-^OO ; 5000 

IOOO ; I560 ; 2500 ! 3000 j 3500 I 3 ; 600 1 \\^ ; 



I i SOOO 

|i5oo ^ioo ! 2200 i 3 ; ; 

... A. i 

I200' '' 2500 ; 3500 




FIG. 27 



i88 ONE HUNDRED YEARS OF LAND VALUES 

The rise of land values in the central business district was by no 
means uniformly distributed, however, and there were eddies and cross- 
currents of value shifts as buyers now rushed to this spot and now to 
that. The Board of Trade section near Jackson and LaSalle streets, 
having had its land boom and building development from 1881 to 1885, 
lagged behind in the later movement from 1888 to 1891; but Dearborn 
Street, long obscure and neglected, had the most remarkable advance of 
all in 1889, coming to the front as one of the chief office-building 
streets in the city. Prior to 1890, most of the interest of the buyers 
centered in the region from Madison Street to Van Buren Street and 
from State Street to Wells Street, where land values for inside frontage 
on most streets reached $7,000 a front foot by 1892 ; but the influence of 
the North Side and West Side cable loops north of Madison Street and 
the erection of skyscrapers along Washington and Randolph streets 
caused a swing back to the north part of the downtown area. Lake 
Street, however, was now outside the zone of main activity, although 
South Water Street was in greater demand than ever among the com- 
mission merchants. 

Land values on State Street from Randolph to Adams Street, with 
the pinnacle at State and Madison streets, rose to a new peak, higher 
than was ever reached before in any section of the city. This increase 
was due mainly to the trebling of rents for ground-store locations, al- 
though the skyscraper construction permitting the vertical expansion 
of department stores and the erection of office buildings over the retail 
stores for the use of doctors and dentists was also an important factor. 
The concentration of retail trade within a limited area on a single 
street, brought about largely by the convergence of new cable and 
elevated lines, was responsible for an increase of land values on State 
Street near Madison from slightly over $1,000 a front foot in 1877 to 
$11,500 a front foot by 1896; while a corner of State and Madison 
Street yielded practically as much ground rent in a single year in 1896 
as it was sold for in 1877, the increase in front-foot values being from 
$ 1,000 to $18,000 in that time. 

In the meantime, land values on Michigan Avenue south of Monroe 
Street, which in 1879 had dropped to $200 a front foot, had, as a result 
of the completion of the Auditorium Hotel at Congress Street and the 
building and planning of other hotels to occupy half the ground from 
Monroe to Congress streets, advanced to $3,000 and $5,000 a front 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 189 

foot by 1892. Wabash Avenue, also, while hopelessly falling behind 
State Street as a retail shopping street, had become the center of the 
trade in musical instruments, and had been benefited by the comple- 
tion of the South Side elevated line so that its land values from Monroe 
to Jackson streets had risen from $400 a front foot in 1879 to $6,000 a 
front foot in 1892. 

Fashionable residential areas, 1877-95. Medium-class houses, seven 
thousand of which were vacant in the West Side alone in 1890, were in 
such poor demand in the old sections of the city, as a result of the exo- 
dus to the suburbs and the growing popularity of apartments with gas, 
steam heat, and janitor service, that middle-class as well as poor-class 
residential land remained stationary or declined in this period. 

Land in the fashionable residential sections in the old city or in the 
suburban districts, on the other hand, advanced rapidly, particularly 
in certain new locations. The value of fashionable residential land did 
not depend upon its income, for mansions costing from $25,000 to 
$200,000 could not be rented for enough to pay 2 per cent income on 
the investment; but upon the number of wealthy men in Chicago, 
the prevailing social customs of the time, which required the rich to 
maintain elaborate homes, and the desire of the social elite to congre- 
gate on certain streets on which circulated fashionable carriages and 
along which were arrayed the palaces whose massive exteriors and pro- 
fuse decorations proclaimed the wealth and social standing of their oc- 
cupants. The use of such land as a fashionable consumption good could 
change quickly with the whims and caprices of fashion. In that event, 
not only did the land lose its value for that purpose, but the mansions 
themselves were abandoned and frequently left as derelicts to be looted 
by vandals. 

Prairie Avenue from Eighteenth to Twenty-second streets had been 
the center of Chicago's social world in the seventies. The land values 
even in that choice spot had declined to as low as $250 a foot in 1879, 
but there was a quick recovery to $700 a front foot in 1882. Thereafter 
the advance was slow, although the $1,000 a front foot offered for the 
corner of Twentieth and Prairie Avenue in 1889 was the highest price 
ever bid for residential land in Chicago up to that time. Meanwhile, 
the Lake Shore Drive, reclaimed from a frog pond by Potter Palmer, 
constructed along the lake by filling in the ground, and crowned by the 
erection of a $150,000 home for the leader of the "400," had risen in 



igo ONE HUNDRED YEARS OF LAND VALUES 

value near Burton Place from $160 a front foot in 1882 to $800 a front 
foot in 1892. As the old Prairie Avenue neighborhood, encroached upon 
by the vice area at Twenty-second and State streets, rapidly lost its 
prestige after 1893, the new "Gold Coast" of the North Side rose into 
prominence, until it became the chief center of fashionable society. 

Michigan Avenue, converted into a boulevard for fashionable car- 
riages, had had, meanwhile, a remarkable rise in its land values south of 
Twenty-sixth Street by 1881, and this rise slowly continued until by 
1888 the corner of Twenty-ninth and Michigan Avenue sold for $700 a 
front foot. The land along Michigan Avenue as far south as Twenty- 
sixth Street had acquired a new value, because of its use for apartment 
hotels for the World's Fair, so that its land values near Eighteenth 
Street rose from $225 a front foot in 1879 to $1,500 a front foot in 
1891. 

The most rapid rises in high-grade residential property in the period 
from 1885 to 1890, however, were in the territory south of Thirty-ninth 
Street. Drexel and Grand boulevards from Thirty-ninth to Fifty-first 
streets were building up rapidly with fine homes from 1885 to 1895, 
Drexel Boulevard lots from Forty-seventh to Fifty-first streets rising 
from $100 to $600 a foot in that interval, and Grand Boulevard lots 
near Forty-seventh Street rising from $75 to $350 a foot from 1879 to 
1893. The fashionable Kenwood and Hyde Park district was also ex- 
panding rapidly, with the result that land values on Woodlawn, Ellis, 
and Greenwood from Thirty-ninth to Fifty-first streets rose from $25 
and $50 a foot in the early eighties to $200 a foot by 1891, while lots on 
Kimbark, Blackstone, and Lake Park avenues in the same region rose 
to $300 a foot. Farther south, from Fifty-first to Sixty-third streets 
on Harper, Blackstone, and Dorchester avenues, the rapid growth of 
apartment buildings in preparation for the World's Fair added to the 
increase in population that was taking place as a result of other forces 
and caused land values to rise from $20 and $50 a front foot to from 
$200 to $350 a front foot from 1882 to 1892. The building of the South 
Side elevated line had given a great impetus to land values along 
Prairie, Calumet, Indiana, and Wabash avenues from Thirty-ninth to 
Sixty-third streets, and their land values had risen from $10 to $20 a 
front foot in 1879 to $125 to $150 a front foot by 1891. Englewood, 
also, had its fashionable residence district on Yale, Harvard, and Nor- 
mal avenues, where land values had increased from $25 to $150 a front 
foot from 1880 to 1890. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 191 

On the West Side the conversion of Washington Street into a 
boulevard from Ashland Avenue to Garfield Park had doubled the 
value of its frontage in the late eighties, until its lots sold for from 
$250 to $300 a front foot by 1892. 

Outlying business centers. The effect of new transportation lines on 
cross- town streets intersecting transit lines running to the central busi- 
ness district had given relatively high value to transfer corners that 
were becoming neighborhood shopping centers from 1880 to 1890. The 
corner of Thirty-first and Indiana Avenue was leased on a $2,ooo-a- 
front-foot valuation in 1892, the highest value paid up to that time 
outside the central business district. The corner of Thirty-ninth and 
Cottage Grove Avenue, where the Cottage Grove horse-car line, the 
Thirty-ninth Street horse-car line, and the Hyde Park dummy lines 
had their terminal transfer points in 1875, grew into the most important 
neighborhood shopping center for a wide range of territory, its land 
value increasing from $220 a front foot in 1881 to $1,500 a front foot 
in 1889. The State Street and Cottage Grove Avenue cable lines, com- 
pleted to Thirty-ninth Street in 1882 and to Sixty-third Street in 1887, 
had greatly enhanced land values along both those streets, the average 
front-foot values of State Street from Fifty-first to Sixty-third streets 
increasing from $15 to $i 60 from 1879 to 1892, and of Cottage Grove 
Avenue between the same streets for the same interval from $10 to 
$250 a front foot. The importance of Twenty-second, Thirty-first, 
Thirty-fifth, and Thirty-ninth streets as cross- town streets connecting 
with the downtown lines on State Street and Cottage Grove Avenue, 
crossing the main boulevards on the South Side, and leading to the 
Illinois Central Railroad stations, led to the speculative activity on 
Forty- third Street in 1891, where land values ranged from $200 to 
$300 a front foot. 

Meanwhile, Sixty- third Street from the Illinois Central Station to 
Cottage Grove Avenue, which had been an unimproved country road in 
1880, had begun to expand near that station as a result of the suburban 
railroad service in the early eighties. Its straggling shops had received 
a great accession of business when the cable line was completed on 
Cottage Grove Avenue to Sixty- third Street in 1887 and a horse-car 
line constructed east on Sixty-third Street in 1888. The coming of the 
World's Fair to Jackson Park and the completion of the South Side 
elevated line down Sixty- third Street in 1893 capped the climax. Land 
values of Sixty-third Street in this section rose from $20 to $30 a front 



192 ONE HUNDRED YEARS OF LAND VALUES 

foot in 1883 to $250 and $300 a front foot in 1891, with the corner off 
Sixty- third and Cottage Grove selling for $400 a front foot. 

In Englewood the business center had been shifting from Wentworth 
Avenue from Fifty-ninth to Sixty-third streets to Sixty-third Street west 
of Wentworth Avenue, and the growth of this community had been so 
great from 1880 to 1890 that the best locations along Sixty- third Street 
in Englewood were valued at over $400 a front foot in 1891. In South 
Chicago, Ninety-second and Commercial Avenue had become the main 
business center of that community during 1890 with inside lots on 
Ninety-second near the corner of Commercial valued at $600 a front 
foot in 1891 . 14 At the old center of the village of Hyde Park, Fifty-third 
and Lake Park Avenue, land values had reached $i,doo a front foot in 
1891, while during the boom on Cottage Grove Avenue near Washington 
Park in the latter part of 1890 the northeast corner of Fifty-first and 
Cottage Grove Avenue that had sold for $60 a front foot in 1879 brought 
$750 a front foot. 

On the West Side, Madison Street west of Crawford Avenue was 
particularly benefited by the cable line on Madison Street to the central 
business district, completed in 1890, and the new Cicero and Proviso 
electric line, built to Harlem Avenue along Madison Street in 1891. 
On the North Side, the corner of North and California had developed 
as a business center by 1895. Cable lines on Milwaukee Avenue, Clark 
Street, and Blue Island Avenue also aided business volume at the outer 
limits of development on these streets. 

Notwithstanding the growth of outlying business centers at a con- 
siderable distance from the main business center during this period, the 
effect of swift transportation, afforded first by the cable lines, then by 
the elevated railroads and the electric surface lines, was to cause 
shoppers to pass by the stores in the old sections on Cottage Grove 
Avenue north of Thirty-ninth Street, Madison Street, Milwaukee 
Avenue, Blue Island, and Clark Street, and to come directly to the 
downtown area where the conveniences and bargains offered by the big 
State Street department stores held a magnetic attraction for them. 
Consequently, the speculative possibilities of the development of outly- 
ing business centers just beyond the settled area did not attract much 
attention at this time, and corners that a few decades later commanded 
values almost as high as downtown land were sold at very low prices 
even during the boom of 1890. 

T * Economist, May 16, 1891. 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 193 

Rise in the value of acre tracts, 1879-92. The rise in the value of 
South Side acre tracts, that in many cases exceeded 1,000 per cent in 
ten years, was one of the most marked features of the real estate market 
from 1888 to 1890, as has already been noted. The extent and character 
of that movement can be best illustrated by a few representative sales. 
Thus land at Forty-eighth and Grand Avenue sold for $4,000 an acre in 
1 88 1 brought $32,500 an acre in 1892. The old Washington Park race 
track at Sixty- third and Cottage Grove Avenue, bought for $2,000 an 
acre in 1883, was valued at $20,000 an acre in 1893. Land south of 
Jackson Park advanced from $1,000 to $15,000 an acre from 1879 to 
1893. Acre tracts at Eighty-seventh and Stony Island Avenue that were 
worth $500 an acre in 1881 sold for $5,600 an acre in 1891. The ground 
from Seventy-fourth to Seventy-fifth, State to Stewart Avenue in Engle- 
wood, that sold for $1,000 an acre in 1886 brought $15,880 an acre in 
1891. The corner of Sixtieth and State advanced in value from $1,000 
an acre in 1883 to $24,000 an acre in 1891. Land at Fifty-fifth and 
Ashland Avenue rose from $500 to $4,500 an acre from 1880 to 1891, 
and at at Eighty-seventh and Ashland Avenue there was a tract which 
sold for $90 an acre in 1880 which had sold for $1,800 an acre in 1890. 
The influence of Stickney tract speculation sent up the values of acres 
at Seventy-first and Western Avenue from $600 to $3,000 an acre from 
1888 to 1890, and at Sixty- third and Crawford Avenue from $600 to 
$2,500 an acre from 1888 to 1891. Thus an extremely rapid advance in 
land values in this decade occurred throughout the entire South and 
Southwest sides of Chicago. 

The advance in the value of acre tracts at the west city limits was 
also noteworthy, although not so extreme as on the South Side. Land 
at the corner of Madison and Oak Park avenues rose in value from $400 
an acre in 1881 to $3,000 an acre in 1890, and the tract at Twelfth and 
Cicero Avenue from $800 to $3,000 an acre in the same period. 

Along the North Shore at Lawrence Avenue and in Rogers Park, 
there was a rise in land values to $5,000 and $7,500 an acre in this peri- 
od, and land near North and California avenues at Humboldt Park was 
also showing a marked increase in value, but the gain in prices on most 
of the Northwest Side was very moderate before 1890. Acre tracts along 
Crawford from North to Fullerton avenues gained in value from $800 to 
$3,000 an acre from 1882 to 1890, but much land within the northwest- 
ern part of the city could still be bought for $500 an acre in 1895. In no 
cases were there advances comparable to the ten-year increases of 1,000 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES - 1890 TO 1892 
INDICATED BY SALES OF ACRE TRACTS 



LOCATION AND EXTENT OF AREAS SOLO. 
THE PRICE IN DOLLARS PER ACRE IS 
INDICATED BY THE FIGURE IN THE SAME 

SQUARE MILE SECTION 




FIG. 28 



THE FIRST SKYSCRAPERS AND THE WORLD'S FAIR 195 

and 2,000 per cent shown in many instances by sales on the South 
Side. 

Thus the rise in land values that culminated in 1890 or shortly after- 
ward was distributed throughout the Chicago area in a widely varying 
manner. In fact, in some sections of the near West Side there was an 
actual decline in land values during this period, and in most of the 
cheap residential sections of the old city there was little if any rise in 
ground values. Even in the downtown area, the rise in land values on 
Lake Street was very slight. The land values of close-in secondary busi- 
ness streets, such as West Madison, Clark Street, Halsted Street, Blue 
Island Avenue, Milwaukee Avenue, Twenty-second Street, and Cottage 
Grove Avenue north of Thirty-first Street, affected adversely by com- 
petition of downtown stores, remained stationary or had only slight 
gains. Acre tracts on the Northwest Side that were not over six or 
eight miles from the city hall had been affected little by the boom that 
raged elsewhere. Notwithstanding the dead weight of these inert sec- 
tions, there were enough centers of speculative excitement in and 
around Chicago to absorb funds from a considerable part of the people 
of Chicago and to create a furor of real estate activity that pervaded the 
entire community. Gains of 700 to 1,000 per cent in land values in ten 
years on the South Side and in the central business district were the 
main factors in the total aggregate advance for the city as a whole. 

The rapid population growth of the outlying territories. The rapid rise 
in land values in the decade from 1880 to 1890 in the territory just be- 
yond the old city limits of 1888 was accompanied, and to a large extent 
caused, by an extraordinary population growth of the new areas an- 
nexed to the city in this same decade. Thus the population of the town- 
ship of Lake increased from 18,380 to 100,223 from 1880 to 1890, or a 
gain of 550 per cent; the number of people in Lake View rose from 6,505 
to 52,273, or a gain of 800 per cent; and the population of Hyde Park 
increased from 15,716 to 133,496, or a gain of 850 per cent, in the same 
decade. While the population in the old city limits increased from 503,- 
145 to 792,377, or 57 per cent in the decade, the population of the main 
portion of the annexed territory advanced from 40,601 to 308,123, a 
gain of 650 per cent. 141 The demand for vacant land on the fringe of 
settlement for the actual use of this rapidly growing population had 
caused the first steady rise in land values which developed into a wild 
speculative boom in 1889 and 1890. 

** Ibid., July 19, 1890; U.S. Census for 1890. 



CHAPTER V 

THE LAND BOOM OF A NEW ERA THAT FOLLOWED 
A WORLD WAR, 1898-1933 

A. SURVEY OF THE CAUSES OF THE GROWTH OF CHICAGO, 
1830-90 AND 1890-1933 

Chicago's growth from the hamlet of a dozen log cabins in the 
swamps around Fort Dearborn in 1830 to the metropolis with over a 
million population at the time of the opening of the World's Columbian 
Exposition in 1893 was attained by the constant accession of new func- 
tions and new sources of power which reinforced the earlier forces 
before they began to wane. The inherent advantages of its situation 
were but dimly realized when it was a military and fur trading post 
prior to 1833 because its hinterland was then almost uninhabited. As 
the migration to the Northwest gained in volume, with the increase in 
the population of Illinois from 157,445 in 1830 to 851,470 in 1850, and 
a gain in the population of all the North Central states 1 from 1,610,473 
to 5,403,595 in the same interval, the young city by the lake became the 
retail center of trade carried on by wagon caravans that had a radius of 
two hundred miles. From 1841 to 1848 Chicago developed a rapidly 
expanding commerce that was based on the imports of timber from the 
white-pine forests of Michigan, which were easily accessible to lake ves- 
sels, and the exports of grain brought in over dirt roads by horse-drawn 
vehicles. The completion of the canal in 1848 facilitated the shipments 
of grain and lumber, and the coming of the railroads from the East in 
1852 and their extension westward to the Mississippi River and beyond 
extended Chicago's trading area enormously. While the population 
of the East North Central states was increasing from 4,523,260 in 
1850 to 9,124,517 in 1870 and the population of the West North Central 
states was rising from 880,335 to 3,856,594, the railroads from Chicago 
were penetrating this rapidly filling area and developing for Chicago 

1 Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, North 
Dakota, South Dakota, Nebraska, and Kansas are the states in the North Central group. 
The first five of these states are listed in the East North Central group and the last seven in 
the West North Central classification. 

196 



A NEW ERA THAT FOLLOWED A WORLD WAR 197 

merchants a great wholesale trade. For the spreading of the railroad 
net disclosed the fact that Chicago was the main transportation gate- 
way between the East and the West, for it was located on the southern 
tip of Lake Michigan on a direct line with New York City and the 
Mohawk Pass which provided the only break in the Appalachian 
Mountain chain. The settlement of the Middle West led to the dis- 
covery that it was one of the richest agricultural valleys in the world, 
for the soil was fertile and the rainfall sufficient to insure maximum 
crops. Within a radius of six hundred miles from Chicago is the area 
that contains most of the improved land in crops in the United States, 
for the soil to the south and east of this belt is poorer and the rainfall to 
the west of it is far less abundant. 2 

From 1870 to 1890 the mileage of Chicago's railroads continued to 
increase, and the population of the East North Central states rose from 
9,124,517 to 13,478,305 and that of the West North Central states from 
3,856,594 to 8,932,112. To its position as a trading center for forest and 
farm products Chicago now added the manufacturing and industrial 
functions. Situated in the midst of agricultural resources of unsur^ 
passed fertility that enabled bountiful crops of wheat and corn to be 
produced and that supported great numbers of hogs and cattle, it was 
in a natural position to supply this prairie world with manufactured 
products. In addition to all of these advantages, it occupied a location 
that was of paramount importance with respect to coal and iron the 
basic materials for modern industrial growth. Chicago at the southern 
tip of Lake Michigan is close to the Illinois coal fields. In Minnesota, 
on the Mesabi Range, are iron-ore reserves hundreds of feet thick which 
run as high as 65 per cent iron and which can be worked from the sur- 
face with steam shovels. These iron deposits, the richest and most 
abundant in the United States, are within easy access of Lake Superior. 
Since it long required above two tons of coal to smelt one ton of iron, 
iron tended to be transported to coal rather than the reverse. The 
Great Lakes furnished a water highway on which specialized ore steam- 
ers carried the iron ore at the lowest ton-mile cost in the world, and 
Chicago was a natural meeting place of Minnesota iron and Illinois 
coal. The opening of the Minnesota iron mines in 1884 gave a further 

2 Maps of improved land in crops, and value of all farm crops (U.S. Census [1910, 
1920]). Also see J. Paul Goode, The Geographic Background of Chicago (1926), for a discus- 
sion of all of these factors. 



198 ONE HUNDRED YEARS OF LAND VALUES 

tremendous impetus to the growth of Chicago and to the further devel- 
opment of its trades and manufactures. 

The growth of Chicago, however, did not stop in 1890, for from 
1890 to 1930 its population tripled. Although the forces responsible for 
the early growth had begun to wane, as the lumber trade declined with 
the exhaustion of the pine forests of Michigan and as primary grain 
shipments fell off when grain was diverted to northern lake or southern 
gulf ports, some of the old forces continued with undiminished vigor 
and new factors appeared to reinforce the original ones. 

As the pig-iron production of the United States increased eightfold 
from 1885 to 1916, and as its coal production increased twelvefold in 
the same interval and the young republic became the largest industrial 
nation in the world, Chicago gained a more than proportionate share in 
this expansion. For the center of population continued to move west- 
ward until in 1920 it was in Indiana almost due south of Chicago, as the 
population of the East North Central states increased from 13,478,305 
to 25,297,185 between 1890 and 1930. The basic steel industries in the 
Chicago region grew and expanded as East Chicago and Gary were 
developed at the tip of the lake. Oil refineries rose in Whiting as trunk 
pipe lines were constructed from the producing fields in Kansas and 
Oklahoma to Chicago. 

Even the remarkable expansion of such basic industries were not 
enough to sustain the upward curve of Chicago land values and popula- 
tion in the last four decades. Power resources were multiplied, the mo- 
bility of the population greatly increased, and the banking strength 
enhanced by a series of inventions and financial devices which came to 
full fruition in this period. The steam power, which, applied to lake 
and river vessels, had brought the tide of population from all parts of the 
United States and Europe to Chicago, and which, applied to the 
wheels of factories, had enabled this population to be supported, was 
supplemented by electric and auto-motive power. Chicago became the 
center of a great power pool or a generating point of electricity from 
which energy was transmitted over high-tension wires to hundreds of 
small communities. It became a part of a national telephone network 
and the principal manufacturing center of telephone equipment, as 
the telephone ceased to be regarded as a toy or a luxury and came into 
general use in the United States. With the advent of the mail-order 
house, the city soon assumed the position of dominance as a distribut- 



A NEW ERA THAT FOLLOWED A WORLD WAR 199 

ing center for Sears, Roebuck and Company and Montgomery Ward 
and Company, for it was located close to the population center of the 
United States. With the growth of the automobile industry from its 
humble start in 1900 to its overshadowing position by 1929, Chicago 
failed to become an important manufacturing center, but the 260,000 
private garages in Cook County, the thousands of filling stations, pub- 
lic garages, and automobile showrooms that sprang up within the city 
attested to the importance of the automobile in altering the city's 
physical structure. The paving of most of the alleys in the city after 
1910, the building of hundreds of miles of concrete highways in the city's 
environs, the widening of a number of the principal streets, and the 
erection of many new bridges over the Chicago River and its branches 
were likewise the result of the omnipresent automobile. The radio, 
which rose from nothing to almost the saturation point of possible 
demand with a set in nearly every home, gave rise to radio-manufac- 
turing industries within Chicago and to a multiplication of retail out- 
lets. The airplane furnished a demand for large landing fields on the 
outskirts of the city, and gave the maximum possibility of speed in the 
movement of people. 

With the increased speed of transportation and communication, there 
was a surge of population outward from the center of the city to vacant 
prairie tracts where new homes with all modern improvements could 
be built. As a result there was a great increase in the demand for 
plumbing supplies and bathroom fixtures, as well as for new furniture 
that was in keeping with the new surroundings. Manufacturing plants- 
and retail stores were kept busy in supplying this demand. 

Still all this was not enough to keep up the constant expansion of 
the numbers of the people who could find employment in Chicago and 
to sustain the rising curve of land values. The banking and financial; 
power of Chicago must likewise be expanded. The great Loop banks 
gained primacy in the Middle West, as they came to hold the deposits 
of seven thousand correspondent banks in smaller cities and country 
towns. In addition, there was a remarkable growth of banks in the 
outlying neighborhoods of Chicago, which attracted the savings of their 
own communities and reinvested them in local enterprises. Finally, in 
that grand multiplication of debt which occurred in the United States 
from 1914 to 1931, in which long-term obligations increased from $38,- 
000,000,000 to $134,000,000,000, there was a vast outpouring of ac- 



20O 



ONE HUNDRED YEARS OF LAND VALUES 



cumulated savings upon real estate bonds in Chicago and upon the 
grandiose financial empire of Insull. 

As Table IX shows, the growth of Chicago's population was not 
sustained in the last few decades so much by increased opportunities 
for employment in manufacturing as it was by the various types of 
services that were rendered in non-material form. The increase in the 
number of salesmen, school-teachers, beauty-parlor operators, adver- 
tising men, and clerks became a striking feature of the generation of this 

TABLE IX* 

NUMBER OF PERSONS OVER TEN YEARS OF AGE IN GAINFUL 
OCCUPATIONS IN CHICAGO, 1910-30 



OCCUPATION 


AGGREGATE NUMBERS 


INDEX NUMBERS 1910= 100 


IQIO 


1920 


1930 


1910 


1920 


1930 


Manufacturing and me- 
chanical 


421,740 
98 , 649 
163,124 
15,960 
51,899 

H9,374 
120,247 


489,001 
110,521 
206,975 
23,110 
71,191 
116,102 
2io,537 


563,750 
143,553 
264,817 
28,329 
"5,970 
I 9 I ,57o 
255,495 


100 
100 
IOO 
IOO 
IOO 
IOO 
IOO 


166 

112 
125 
145 
137 
9 8 

175 


133 
145 
163 
177 
223 

165 
213 


Transportation 
Trade 


Public service 


Professional 


Domestic and personal. 
Clerical 


Total 


996,589 


1,231,434 


1,658,858 


IOO 


124 


166 





* "Occupational Statistics, Illinois," Fifteenth Census of U.S. (1930), Table III, p. 6. 

new era which sought to avoid physical exertion, to get rich by specula- 
tion, to create values by advertising, to appear beautiful, well groomed, 
and youthful at all costs, and to rise to positions of power and dominance 
through the magic potency of a formal education ending with a college 
degree. Thus the employees in manufacturing increased 33 per cent 
from 1910 to 1930, while employees in all other lines increased 90 per 
cent in the same interval. 

B. THE PERIOD FROM 1898 TO 1918 

Chicago in 1900. The Chicago of 1900 presented a picture that may 
be contrasted with the appearance of the city in 1873 and in 1933. In 
the central business district, the elevated loop had just been completed. 
Above the skyline of the five- and six-story buildings erected after the 
fire of October 9, 1871, rose the first crop of skyscrapers the twenty 



A NEW ERA THAT FOLLOWED A WORLD WAR 201 

buildings from twelve to nineteen stories high that were the marvel of 
the nineties. State Street department stores were just attaining their 
first exuberant expansion, and as the elevated lines brought people 
downtown, these multiple stores were bitterly attacked by the small 
local merchants, even as the chain stores are today. The banks and 
theaters were practically all concentrated in the central business area, 
so that the Chicago "Loop" had become the place where the people 
in the Metropolitan Area congregated for the purpose of making most 
retail purchases, except foodstuffs, for transacting financial business 
and for entertainment. For this reason, land values in the central busi- 
ness district had advanced greatly even from the boom prices of 1873, 
and the gain had been maintained even during the depression following 
the panic of 1893. 

The belt of land extending for three miles from the Loop on the 
South, West, and North sides, which was an area of new and vigorous 
growth in 1873 and an obsolete and blighted area in 1933, contained a 
strange conglomeration of social and economic forces in 1900. A consid- , 
erable proportion of all the factories and industries in the city still 
hugged the banks of the Chicago River and its branches on the nean 
West, North, and South sides. Close to the workshops of the West 
Side in the i square mile from Twelfth to Twenty-second streets and 
from Halsted to Ashland avenues were packed 73,400 people, or twice 
as many as lived in 88 square miles inside the outer edges of the city lim- 
its. The influx of a steady stream of Italians, Poles, and Russian Jews into 
the old residential areas of the city kept up a demand for this cheaper 
type of property. The older Irish and German elements sold out to new 
immigrants and used the proceeds to buy homes along the new ele- 
vated or electric lines. Industries were also beginning to expand into 
the old residential sections, so that owners of such property felt that 
there was a prospective demand from this source also. The colored 
race, confined within the narrow limits of a belt from Twenty-sixth to 
Thirty-ninth streets, from State to LaSalle streets, also paid high rents 
for the shacks within those boundaries. Likewise, the Chinese segre- 
gated on South Clark Street, and the Jews, hemmed in by the invisible 
wall of their West Side ghetto, paid high rents for obsolete buildings 
because of the social barriers against their movements. The wide-open 
"red light" district, with its two hundred and sixty houses of prostitu- 
tion on State and Dearborn streets from Eighteen to Twenty-second 



202 ONE HUNDRED YEARS OF LAND VALUES 

street, also paid high returns to the owners for their immoral use. 
A more intensive use of land for apartment buildings along business 
streets and in close proximity to fashionable residential areas also had 
supported land values in these sections to some extent. Where other 
opportunities did not present themselves, the once fashionable resi- 
dences on the near North and South sides were converted into boarding- 
houses. 

Thus land in what is now known as the blighted area yielded an in- 
come and had prospects of enhancement in value due to absorption by 
industry that it does not have in 1933. Even in 1900, however, the re- 
turns from this class of property were capitalized at a high rate, so 
that the land values as a whole had ceased to advance. Moreover, the 
close proximity of the vice section, the colored belt, and of the advancing 
line of industries and warehouses to the fashionable residential section 
on Prairie Avenue had already started its decline. Similarly, Ashland 
Avenue, Jackson Boulevard on the West Side, and Dearborn and La- 
Salle streets on the North Side were sliding downward and losing their 
social prestige. 

The intrusion of the races of the new immigration, of factories and 
warehouses, and of vice elements was thus pushing the older immi- 
grants and the higher-income classes into a zone of new growth. The 
new areas being built upon in 1900 were chiefly located along the new 
elevated lines, such as at the terminus of the Northwestern elevated 
line at Wilson Avenue, southeast of Sixty-third and Cottage Grove 
Avenue, along the Metropolitan elevated line from Cicero to Crawford 
avenues and from Madison to Harrison streets. It was the era when the 
two- apartment building was gaining rapid popularity and when rows 
and rows of such structures were being erected. Other areas of rapid 
growth at the beginning of this century were the Kenwood district; 
Englewood; Milwaukee Avenue from Chicago to North Avenue, 
where a colony of Poles was expanding rapidly; and the district east of 
Humboldt Park, which was being settled by Germans. 

Beyond this ring of new growth that was being added to the solid 
nucleus of the old city were detached settlements that varied in size 
from hamlets to cities of fifty thousand population. The largest of these 
planetary urban bodies was South Chicago, which had become a great 
iron and steel center as the commerce on the Calumet River was about 
to surpass the waning traffic on the Chicago River. Other industrial 



A NEW ERA THAT FOLLOWED A WORLD WAR 203 

towns inside the city limits of Chicago, but separated by tracts of 
prairie from the main body, were Hegewisch, Pullman, Kensington, 
and Riverdale on the South Side. South westward was the pleasant 
suburb of Morgan Park. Beyond the city limits to the north and west 
communities were being settled by the office workers in Chicago. These 
included Oak Park and LaGrange to the west and Evanston, Wilmette, 
Winnetka, and Lake Forest along the North Shore. These outlying 
settlements within and without the city limits of Chicago ran the entire 
gamut of the social scale from the squalid quarters in South Chicago, 
where fifty- thousand inhabitants were "hemmed in by stretches of rail- 
road tracks and ugly buildings" and " where scores of towering smoke 
stacks and furnaces pour out smoke and dust day and night," to the 
spacious estates of the millionaires of Lake Forest. 3 

As Figure 29 shows, beyond the main body of the settled area of 
Chicago and between the detached settlements there were thus wide 
stretches of vacant land within the city limits of Chicago on both the 
North and the South sides. The Northwest Side, west of Western Ave- 
nue and north of North Avenue, was mostly vacant, except for the 2 
square miles from Western to Kedzie and from Belmont to North 
avenues. In the area thus defined, excluding these 2 square miles, there 
were 32 square miles, and in it there lived only 39,131 people in 1900. 
Even though the population of this area had increased from 3,000 in 
1880 and 10,734 in 1890 to this number, not more than one-fourth of 
this territory had buildings on it and one-third of it was farm land that 
had never been subdivided. There were parts of it that were 2 or 3 
miles from a street-car line or a paved street. Less than 6 per cent of 
the streets was paved and no alleys had been improved. The population 
was clustered around many small centers such as Bowmanville, where 
there was a pickle factory; Cragin, a small Polish manufacturing town; 
Dunning, the county infirmary; Hermosa; Hanson Park; and stations 
on the Northwestern Railroad at Avondale, Irving Park, Montclaire, 
Jefferson, and Norwood Park. 4 

Chicago in 1900 thus presented a series of startling contrasts: wide- 
open prairies and densely crowded, sunless, ill-ventilated tenements 
without gardens, shade trees, or grass in their vicinity; 5 houses in the 

3 "Report of the South Park Commission on Small Parks, 1902" (an unpublished report). 

* Chicago Tribune, August 24, 1900. 

s "Report of the South Park Commission." 



MAP OF CHICAGO 

-SHOWING- 



EXTENT OF SETTLED AREA 
IN 1899 



LEGEND 



H^! AREAS SETTLED BEFORE 1873 

MiM GROWTH OF SETTLED AREA FROM 1873-1899 



NOTE:BAS MAP SHOWS PRESENT CITY STRUCTURE 



PREPARED BY HOMER HOYT 




FIG. 29 



A NEW ERA THAT FOLLOWED A WORLD WAR 205 

"red light" district a few blocks from the mansions of millionaires; six n 
teen-story office buildings next to three-story obsolete buildings ; large 
local-option districts without a single saloon and the Stock Yards dis- 
trict with 500 saloons in a few blocks. In all, there were 6,373 saloons 
occupying 31 miles of street frontage in Chicago, and it was estimated 
that the 153,477,900 gallons of intoxicating liquors consumed annually 
would completely immerse the Masonic Temple. 6 

The period of twenty years from 1898 to 1918 was one of remarkable 
physical growth, as Figure 30 shows. The city of Chicago added a 
million to its population from 1900 to 1920, an increase of 60 per 
cent. Bank clearings rose from $5,517,335,477 in 1898 to $16,198,-. 
985,175 in 1915, or a gain of 194 per cent. 7 

The value of Chicago's manufactured products more than tripled 
between 1896 to 1915, rising from $483,000,000 in the former to $i,- 
723,700,000, or 357 per cent in the latter year. 8 Traffic on the elevated 
lines increased from 55,204,936 passengers in 1898 to 197,440,107 in 
1 91 8, 9 or a rise of 258 per cent. The gains registered in the new indus- 
tries were far more sensational. The number of automobiles in Chicago 
in 1908 was multiplied by seventeen before the end of 1920 as the num- 
ber rose from 5,000 to 86,5oo. 10 The number of telephones installed in 
Chicago increased from 11,680 in 1895 to 575,840 in 1920 a gain of 
nearly fifty fold." Electricity generated for Chicago consumers mount- 
ed one hundred and thirty-four fold in the same period from 1895 to 
1920, with an increase from 13,720,000 to 1,831,628,000 kilowatt- 
hours. 12 These gains were accomplished during a period of slowly rising 
wholesale prices in the United States, but the increase was moderate, 
so that the wholesale price level of 1915 was only 25 per cent above 
that of 1900. 

Notwithstanding this marked growth of Chicago in the first two 
decades of the twentieth century, there was no general land boom in 
which values took a sudden spurt in these years. It is true that the 

6 Chicago Tribune, September 8, 1900. 1 Annual reviews in ibid. 

8 Typewritten statement from the Chicago Clearing House Association published in the 
early part of January of each year. 

9 Letter to the author from the receiver of the Chicago Transit Lines. 

10 Report of the License Department of the city of Chicago. 

11 Letter to the author from the statistician of the Illinois Bell Telephone Co. 

12 Commonwealth Edison Company Chicago Year Book (1931), p. 31. 



206 



ONE HUNDRED YEARS OF LAND VALUES 



annual volume of new building more than tripled from 1900 to igi6, 13 
that the annual number of transfers of real estate and the number of 
lots subdivided quadrupled in the same time interval, and that land 

FACTORS IN THE GROWTH OF CHICAGO 

TELEPHONES' 1= 1,000 KILOWATT HOURS' I = 10,000000 

AUTOMOBILES' I =10000 POPULATION: /- IOOOOO 

PASSENGERS CARRltDON SURFACE LINES' 1= lOOOO'OOO 

PASSENGERS CARRIED ON RAPID TRANSIT LINES: 1= I OOOOOO 
OUTLYING BANK DEPOSITS' I =$lo'000jOOO 

1000 

900 

BOO 

700 

600 

00 

400 




I89S 1900 1905 1910 1915 1920 1925 1930 1935 
YEARS 

FIG. 30 

values of the city of Chicago doubled in these sixteen years, but the 
growth was gradual. There was no wild excitement and no widespread 
public participation in the real estate market. Land values advanced 

13 Measured by the number of buildings or by street frontage occupied by new buildings. 
The value of new construction was $20,000,000 in 1900 and $112,000,000 in 1916. 



A NEW ERA THAT FOLLOWED A WORLD WAR 207 

steadily in the Loop, the North and Northwest sides, along the newly 
extended elevated lines, and in the rising outlying industrial and busi- 
ness centers, but the painful remembrance of the aftermath of the boqm 
of 1890 checked any tendency toward reckless speculation. While St. 
Louis, New York, Seattle, and the cities of the Canadian Northwest had 
the experience of real estate booms from 1904 to 1915, the Chicago land 
market remained quiet and unruffled. 

The narration of the changes in land values in Chicago in the period 
from the beginning of the twentieth century to the end of the World 
War lacks the stirring and dramatic episode of the periods that pre- 
ceded and followed it. The character of the growth of the city and the 
nature of the land market in the pre-war days nevertheless deserves 
careful study, for it presents the picture of a market in which there was 
a steady occupation for those engaged in the real estate business. After 
the hectic experiences of a boom and a depression many of those plunged 
from wealth to poverty sigh for a return of the "good old days when a 
modest competence could be earned by all brokers." 

The leading features in the Chicago real estate market for the period 
beginning in 1898 may now be considered. 

Beginning of the recovery in Chicago real estate. In 1898 the Chicago 
real estate market was at its lowest ebb of activity. Foreclosures and 
judicial sales were at their peak. Rents, the number of lots subdivided, 
and the volume of real estate transfers were at their lowest points since. 
1892. There was an oversupply of office buildings in the central busi- 
ness district, of old houses in the intermediate belt, and of apartments 
in the vicinity of the World's Fair grounds. Vacancies meant a total 
loss of income, while rents of occupied buildings were not only low but 
in many cases were not promptly paid. The landlords not only ac- 
cumulated a load of bad debts, but they were forced to accede to the 
demands of tenants for extensive repairs. Many apartment buildings 
and downtown skyscrapers were in the hands of receivers or in more 
favorable cases barely paid 2 per cent on the investment. Such condi- 
tions were not conducive to the sale of improved property, which was 
further demoralized by the load of foreclosure sales hanging over the 
market. For vacant lots in most localities there was scarcely any de- 
mand at all. Subdivision activity, as measured by the number of new 
lots platted in the Chicago Metropolitan Region, had declined in 1899 
to 4 per cent of the peak volume of 1891. 



208 ONE HUNDRED YEARS OF LAND VALUES 

Even in this trough of the depression there were some favorable fac- 
tors. Interest rates on mortgages in the central business district had de- 
clined to 4 and even 3^ per cent, 14 with the result that long-term lease- 
holds were capitalized on a 4 instead of a 5 per cent basis. This alone 
would tend to raise downtown land values 25 per cent, and although its 
effect did not immediately show itself in such a blanket increase, the 
lowering of the capitalization rate was now operating to increase valua- 
tions. Moreover, even in 1898 apartment buildings were being built 
along the line of the South Side elevated system, and houses were going 
up along the tracks of the Northwestern elevated railroad, which was 
then in process of construction. 

In 1899 there was a general improvement in business conditions. 
Wages advanced 5 and 10 per cent. 15 There were not one-fourth as 
many vacant flats in the spring of 1899 as in the spring of i898. 16 Office 
rents were lower, 17 but rents elsewhere ceased to decline and were more 
promptly paid. 18 Capitalists began to buy property at foreclosure 
sales. 19 

New transportation systems. One of the factors that was of the great- 
est aid in the renewal of real estate activity was the improvement in 
transportation. From 1890 to 1900 there had been a revolutionary 
change in the internal transportation system of Chicago. Elevated 
lines had been constructed on the South Side, the West Side, and finally 
on the North Side, and these were at last linked together in a union 
loop in the central business district in 1900, which thereafter became 
known as the "Loop." Of even greater importance was the substitu- 
tion of electric power for steam and horse power in the elevated and 
surface lines. From 1895 to 1897 many new street-car lines were laid in 
the northwest section of the city, and these new lines were being oper- 
ated by electric power. In addition, horse-car lines, the slowest parts 
of the transportation system, were being rapidly electrified at this time, 
and, finally, electric power was installed in the cable trunk lines. 20 

Effect on different sections of the city. Prior to 1893 the South Side 
had by far the best transportation facilities, with four railroads providing 
good suburban service. The North and West sides not only had fewer 

J i Chicago Tribune, August 14 and September 4, 1898. 

15 Ibid., March 4, 1899. l8 Ibid., December 31, 1899. 

16 Ibid., March 12, 1899. ' Ibid., March 5, 1899. 
J 7 Ibid., January 29, 1899. 20 See Fig. 31. 



MAP OF CHICAGO 

-SHOWING - 

_ SURFACE AND ELEVATED LINES 
IN 1902 

LEGEND 



ELECTRIFIED JULY ' 
CABLE LINES BUILT FROM 1892 TO 1894 

ELECTRIFIED IN JULT 1906 
^ ELECTRIC SURFACE LINES BUILT FROM IS92 

TO I9O2 
ELEVATED LINES COMPLETED FROM 1892 




mmim 



FIG. 31 



210 ONE HUNDRED YEARS OF LAND VALUES 

railroads and cable lines, but they were further greatly handicapped by 
the barrier of the Chicago River, with its frequent opening and closing 
of bridges. The rapid decline of traffic on the Chicago River, together 
with the new elevated lines, whose high bridges remained permanently 
open, removed the disadvantageous factor affecting the North and 
West sides. 

In the early twentieth century the side of the city that grew most 
rapidly was the North Side and the northwest sections. The South 
Side suffered from the aftermath of the World's Fair boom, the obsoles- 
cence of its buildings, and the spread of vice elements. Nevertheless, 
the growth of its great industrial plants held a large population and 
finally enabled new high residential sections to be developed on the 
edges of its old areas. 

There was a certain pattern of growth, however, that affected all 
sections of the city. The elevated lines in the three sections were being 
pushed into undeveloped tracts, and along these newly constructed 
elevated structures on the South and West sides, and on the North 
Side after 1900, rows and rows of apartment buildings were being erected. 
The migration of factories from the river was beginning, and industrial 
plants were filling in the area near the Loop on the three sides of the 
city, and were also moving outward to belt-line locations or to newly 
created industrial districts. The direction of growth of the high-grade 
residential area was proceeding outward in straight lines and along the 
Lake Shore. The newly arriving immigrants were pushing the old mem- 
bers of foreign colonies farther out. Meanwhile, the central business 
district was drawing support from all three sections of the city and 
developing as an exclusive retail center. 

Because of the similarity of movements taking place in concentric 
circles around the central hub of the city, it is desirable to discuss the 
movement of land values for this period with reference to the character 
of the use and occupancy of the Loop and of the different belts of land 
encircling the Loop. 

The central business district: office buildings. With the cessation of 
the construction of new office buildings, the large supply of vacant 
offices existing in 1900 had been almost entirely absorbed by 1902. 
Rents were advanced 15 per cent in 1902." Plans for the erection of 
eighteen new buildings to cost over $io,ooo,ooo 22 caused the City Coun- 

21 Economist, May 15, 1902. Ibid., January 25, 1902. 



A NEW ERA THAT FOLLOWED A WORLD WAR 211 

cil to remove the old limit of 130 feet on the height of buildings and to 
establish a new maximum height of 260 feet. 23 In 1903 office rents were,, 
again advanced 1 5 per cent, and buildings, such as the Monon and the 
Caxton, were fully rented for the first time. 24 Downtown office property 
was thus once more a profitable investment. 

The Loop retail district. The completion of the Northwestern ele- 
vated lines to Wilson Avenue in 1900 and the growing traffic on all the 
elevated roads had greatly increased the throng of shoppers in the Loop 
retail district. Locations on State Street, the "Main Street" of two 
million people, were in greater demand than ever before. The value of 
lots on State Street from Washington to Van Buren streets reached 
levels by 1904 "that would not have been dreamed of a few years ago, 
not even in the boom times preceding the World's Fair," 25 and in 1906 
the Economist declared that "there was nothing in the world so valuable 
as State Street frontage." 26 Advancing business rents made possible by 
a larger volume of sales at higher prices and a decline in the capitaliza- 
tion rate from 5 to 4 per cent had raised the peak prices of State Street 
frontage in 1890 to levels that were two and three times as high. In 1903 
the southwest corner of State and Adams streets was leased on a basis 
of $20,731 a front foot. 27 In 1905 frontage on State Street between 
Washington and Madison streets was leased on a valuation of $22,500 
a front foot, 28 and a lease on the basis of $15,300 a front foot was refused 
for a lot on State Street south of Jackson Boulevard. 29 In 1906 the 
corner of State and Quincy streets was capitalized at $26,114 & front 
foot, and State Street north of Madison Street at $24,419 a front foot. 30 
Ten years before, $10,000 a front foot had been regarded as a top price. 

Retail trades were expanding until by 1907 they occupied the ground 
floors of the entire Loop area. 31 Firms that could not afford to pay the 
high rents demanded on State Street moved to Wabash Avenue or to 
Dearborn, Clark, and Wells streets, or to the east-west thoroughfares.^ 
Lots on Wabash Avenue, as a result of the change from wholesale to 
retail use, reached the highest prices in their history. Michigan Avenue/ 
evolving as a hotel center, also had a remarkable transformation. In 

23 Ibid., March i, 1902. 

24 Ibid., February 7, 1903. 28 Ibid., October 7, 1905. 

25 Ibid., December 31, 1904. ^ Ibid., September 30, 1905. 

26 Ibid., March 24, 1906. 3 Ibid., March 10, 1906. 

2 7 Ibid., May 23, 1903. 31 Ibid., August 24, 1907. 



212 ONE HUNDRED YEARS OF LAND VALUES 

1902 a lot on Michigan Avenue south of Jackson was leased on a basis 
of $5,707 a front foot. 33 

Downtown wholesale area. The wholesale firms in the area south of 
Monroe Street and west of Wells Street had recovered from the panic 
of 1893 within four years. A remarkable expansion of business had by 
1902 filled all the available space at advancing rents. Ten new build- 
ings, with a total of 1,063,000 square feet of floor space, were erected 
during 1903 and 1904, creating a temporary oversupply of over 1,000,- 
ooo square feet in 1904, which was, however, entirely absorbed during 
1 905." 

Summary: downtown area. Thus nearly the whole of the downtown 
area profited from the growing retail and wholesale businesses and the 
enlarged demand for office space. In addition, the prosperity of the 
financial interests caused the erection of new bank buildings on La- 
Salle Street. Buyers sought old run-down properties yielding a low re- 
turn on the investment which with modern improvements and supe- 
rior management could be made to yield 8-12 per cent on their original 
cost. 34 Leases made in the preceding decade were sold at large pre- 
miums. Central business property had become concentrated in fewer 
owners and tied up to an increasing extent under long-term leases, so 
that sales of land, free from leases, were less frequent. 

Expanding wholesale and warehouse interests. The expansion of the 
retail area in the Loop district and the higher land values resulting 
therefrom forced the warehouses and wholesale houses that were for- 
merly located on Wabash, Wells, and on other streets adjacent to the 
Loop to move into the old residential area near the Loop that had long 
been dormant. On the near South Side, Clark at Sixteenth Street, 35 
Indiana at Sixteenth Street, 36 and Wabash near Twenty-third Street 37 
began to develop as warehouse centers in 1903. On the near North Side 
on Illinois and Erie streets east of St. Clair Street, a section of reclaimed 
land was sold for warehouse purposes in I9O7. 38 In 1902 the first auto- 
mobile shop was leased on Michigan Avenue near Fourteenth Street. 39 
In 1903 a new furniture center was established at Twelfth and Michigan 

32 Ibid., November 22, 1902. 

33 Ibid., November 19, 1904; September 2, 1905. 

34 Ibid., June 27, 1903. 37 Ibid., March 10, 1906. 

35 Ibid., September 19, 1903. 38 Ibid., October 19, 1907. 

36 Ibid., October 10, 1903. 3 Ibid., January n, 1902. 



A NEW ERA THAT FOLLOWED A WORLD WAR 213 

and at Sixteenth and Indiana Avenue. At this point 623 agencies out of 
a total of 4,000 in the United States sold over $40,000,000 worth of 
furniture in 1 903.4 

Other large mail-order and wholesale firms moved north and west 
from their old locations near the Loop. In 1904 Sears, Roebuck and 
Company left their building at Canal and Washington streets to go to a 
huge new building at Kedzie Avenue near Twelfth Street. 41 In 1906 
Montgomery Ward, Sprague- Warner, and the Edward Hines Lumber 
Company moved to the north branch at Chicago Avenue. 42 

New manufacturing centers. Old manufacturing centers near the 
Loop continued to grow in this period. New boot and shoe manufac- 
turing plants were located on the district from Grand to Chicago ave- 
nues, west of Wells Street to the river, while refrigerating plants for 
fruits and vegetables were expanding on Illinois and Michigan east 
of State Street. On the near West Side, machinery houses were growing 
in the area on Canal and Clinton streets between Washington and 
Randolph streets, and south of Adams Street high-class manufacturing 
plants were pushing toward Roosevelt Road. 

The most important manufacturing developments, however, were in 
regions farther from the Loop. The Western Electric Company moved 
from Clinton and Congress streets six miles southwestward to Twenty- 
second and Cicero Avenue on the Chicago Belt Line in I9O3. 43 The' 
Central Manufacturing district, from Thirty-fifth to Thirty-ninth 
streets, Ashland to Morgan Street, starting in 1902 with the purchase of 
the ground for $900,000, had developed rapidly from 1904 to 1906 when 
twenty-five manufacturing plants were located there. 44 Pullman was 
growing as an industrial center. The Corn Products Company bought 
140 acres for their new plant at Summit in i9o6. 4S The Clearing rail- 
road yards were built and factories began to be erected near them. 
Two new plants were built at the Stock Yards. 46 

The most remarkable growth of manufacturing plants, however, 
took place in the Calumet region. The commerce of the Calumet River 
which had been only one-tenth of that of the Chicago River in 1889 had 
steadily advanced as that of the Chicago River declined. In 1906 the 

40 Ibid., November 7, 1903. 

41 Ibid., December 24, 1904. ^ Ibid., September 21, 1907. 
** Ibid., March 24, 1906. 4S Ibid., December i, 1906. 
43 Ibid., October 24, 1903. * 6 Ibid., December 17, 1904. 



214 ONE HUNDRED YEARS OF LAND VALUES 

commerce of the two rivers was equal in value. In 1916 the traffic on the 
Calumet was five times as great as that on the Chicago River. 47 The 
iron and steel industries were leading factors in this growth, although 
grain and lumber were scarcely less important. There were sixty grain 
elevators in South Chicago in ipo;. 48 The development of this region 
was not confined within the city limits of Chicago, although the benefit 
of Chicago railroad rates aided the new cities growing beyond its 
boundaries. Indiana Harbor, Indiana, was being boomed in I903. 49 
Gary was founded in 1906. 

Value of railroad and manufacturing property. The lower value of 
manufacturing sites at a distance from the central business district was 
one of the reasons for the more rapid growth of the outer manufacturing 
districts. Land on the South Side adjacent to the Loop sold for not 
less than $20 a square foot. On the West Side, at Madison and Clinton, 
the Northwestern Railroad paid $10 a square foot for its depot site. 
A little farther out from the center of the city, at Sixteenth and Indiana 
Avenue, Twenty-second and Dearborn streets, and at Chicago Avenue 
and the north branch of the river, the value was only $2.00 a square 
foot. On the West Side, the value of land along the Chicago River 
ranged from $10 a square foot at Madison Street to $5.00 a square foot 
at Harrison Street, $1.25 a square foot at Twenty-second Street, and 
5 cents a square foot at Crawford in the period from 1905 to 1908. Land 
at St. Clair and Illinois streets sold as low as 60 cents a square foot in 
1907, in the Central Manufacturing District at from 25 to 60 cents a 
square foot, at Arthington and Kedzie avenues 30 cents a square foot in 
1904, at Lake Michigan and the Calumet River 45 cents a square foot 
in 1905, and at Twenty-second and Cicero Avenue at 5 cents a square 
foot in 1906. 

Fashionable residential property. The Lake Shore Drive, from 
Division to North Avenue, valued at from $1,000 to $1,500 a front foot, 
was the center of fashion after 1900. The building of new high-class 
residences had practically ceased from 1900 to 1908, because old man- 
sions on Michigan and Prairie avenues could be bought at prices far 
below their original cost. The residence at 1922 Calumet which cost 
$100,000 was sold with 100 feet of ground for $33,500 in I9o8. s The 

47 Chicago Tribune, December 30, 1916. 

48 Economist, February 9, 1907. 

49 Ibid. so fbid., October 24, 1908. 



A NEW ERA THAT FOLLOWED A WORLD WAR 215 

John W. Gates's mansion at 2944 Michigan Avenue that cost $300,000 
was sold with 145 feet of ground, valued at $1,000 a front foot in the 
eighties, for $65,500 in the same year. 51 As fine homes were being aban- 
doned for apartments, $4o,ooo-$6o,ooo houses were offered for rent at 
$200 a month. Kenwood was the preferred residential section of the 
South Side at this time, with deep lots on Woodlawn, Ellis, and Green- 
wood avenues from Forty-fifth to Fifty-first streets selling for only $200 
a front foot. Grand and Drexel boulevards were selected as locations 
for high-grade apartments, and their lots were valued at from $200 to 
$300 a front foot. 

Apartments. There was a rush to apartment construction at this 
time. Even during the extreme depression of 1897 and 1898, specula- 
tive builders had erected apartments along the line of the South Side 
elevated road. By the fall of 1901, the excess of apartment space built 
during the World's Fair boom had been largely filled. 52 In 1902 apart- 
ment rents advanced 10 per cent. 53 Of 9,200 apartments and houses in 
the hands of leading agents in 1903, only 131 were for rent. 54 Apart- 
ments varied in size and quality from the modest two flats of the West 
Side to the de luxe apartments erected by Potter Palmer on the Lake 
Shore Drive to rent for $1,000 a month. 55 Fine apartments renting for 
from $100 to $300 a month were being built on Grand and Drexel 
boulevards, on Michigan Avenue near Garfield Boulevard, on Cornell 
and East End avenues near Fifty-fourth Street, and on Hyde Park 
Boulevard. 

Old residential areas. Rents of old houses, although more promptly 
paid than in 1897, were lower in 1908 with steam heat added than in 
1897, and of course were far below the peak levels of 1892, as Table X 
shows. 56 

The increase in immigration and the growth of the negro section was 
causing an expansion of some of these old areas. The ghetto was over- 
flowing westward and a new ghetto was forming between Harrison and 
Fourteenth streets, Racine and Robey streets, by I9O3. 57 The colored 
belt had burst the boundaries that had prior to 1900 confined it be- 
tween State and Federal streets from Twenty-second and Thirty- 

s 1 Ibid., May 23, 1908. 

52 Ibid., September 7, 1901. & Ibid., February i, 1902. 

Ibid., January 3, 1903. & Ibid., April n, 1908. 

54 Ibid., October 10, 1903. & Ibid., May 17, 1903. 



2l6 



ONE HUNDRED YEARS OF LAND VALUES 



ninth streets where negroes had paid 8 per cent higher rents than were 
paid for far better houses east of State Street. By 1 908 the colored people 
had occupied Wabash Avenue solidly from Twenty-sixth to Thirty- 
ninth Street, had taken possession of many houses on Vernon and Calu- 
met avenues in the same limits, and had placed thirty-two of their race 
on Groveland Avenue from Twenty-ninth to Thirty- third Street. An 
organization of white property owners endeavored to halt the advance 
east of Wabash Avenue by an agreement not to rent or sell to colored 
people. The effect of the appearance of the first colored family in a 
neighborhood was thus described: "The first colored man to move into 

TABLE X 
RENTS PER MONTH OF SELECTED OLD HOUSES IN CHICAGO, 

1892, 1897, AND 1908 



Location 


1892 


1897 


1908 


South Park near Thirty-third 
Street 


$ 7 <r 


$4.0 


$e 


South Park near Thirty-third 
Street 


6q 


sir 


2< 


Lake Park Oakwood Boulevard 




4O 


ic 77 qo 


Vernon near Forty-third Street 




7O 


4S* 


Wabash-Twentieth Street 




c?o 


40 


348 North Clark Street 
Elm-Dearborn Street 
Elm-Dearborn Street 




60 
83-33 

65 


SO 

60* 
65* 


Elm-Dearborn Street 




7<r 


50* 


Elm-Dearborn Street 




"?O 


So* 











* Steam heat added. 

a community of this character is compelled to pay higher rent but as 
soon as he is discovered, rents throughout the entire section go down, 
and it is with difficulty that any one is secured to occupy adjoining flats 
or houses." 58 

New residential areas. In 1907 the branch of the South Side elevated 
road was completed to Englewood, and the branch of the Northwestern 
elevated line was finished to Ravenswood. In 1908 the Northwestern 
elevated line was extended from Wilson Avenue to Evanston. The 
most rapid growth took place at the termini of these extensions. By 
1908 there was a population of 100,000 around the Wilson Avenue 
station. Sixty- third and Halsted streets and Lawrence and Kimball 
avenues were developing rapidly as important outlying business Gen- 
s' 5 Ibid., August 8, 1908. 



A NEW ERA THAT FOLLOWED A WORLD WAR 217 

ters as a result of these elevated lines. The Douglas Park branch of the 
Metropolitan elevated line was being extended along Twenty-second 
Street to carry the employees of the Western Electric plant to and from 
their work. 

The Chicago land market as a whole, 1900-1908. The foregoing ac- 
count shows that in certain spots, as in the central business district, 
in the Calumet region, and along the new elevated extensions, land 
values were constantly making new high records from 1900 to 1908. 
It was by no means true, however, that land values were advancing 
generally or that real estate activity was distributed throughout the 
entire Chicago area. In fact, notwithstanding the improvement in gen- 
eral conditions, land values in many sections continued to decline in 
this period. It was not that real estate conditions grew worse, but that 
landholders, finding that the market for certain kinds of property did 
not improve, at least reluctantly accepted a lower price than their ask- 
ing price in 1900. Thus sixty-seven parcels of property scattered all 
over Chicago were valued by George C. Olcott at 20 per cent less in 
1910 than they were appraised at by William A. Bond in 1898 and 



Several times in this period it was thought that the turn of the tide 
had come. Thus in March, 1902, the editor of the Economist said: 

Events now known to everybody prove conclusively that the market has started 
on a career of greater activity. Nor can it be said any longer that the downtown 
area is the only one where large business is being done. All the localities are coming 
in, notably the north shore, the west side, the vacant properties of the southwest, 
the Calumet district and other areas. 

The ebb has certainly been long enough and trying enough to the brokerage 
fraternity and the owners of property, beginning as it did in 1893 and continuing 
to about the close of the year 1900. We are not entirely through all the phenomena 
of a depressed market for there are always some remnants of insolvency and bad 
luck after the market has taken a turn for the better. 60 

In spite of this hope that the market for vacant property would 
soon revive, over two years later at the end of 1904 the following pes- 
simistic accounts were given: 

From month to month and from year to year they [holders of outlying vacant 
property] have been looking forward hopefully to a revival in the speculative inter- 

s' From the records of William A. Bond & Co. There is, of course, the possibility that the 
two appraisers had different standards of valuation, so that this comparison taken alone is 
not conclusive. 

60 Economist, March i, 1902. 



2i8 ONE HUNDRED YEARS OF LAND VALUES 

est which would encourage subdividing. The speculative interest in outlying prop- 
erty is entirely absent, nor is there any inquiry for any property of this kind except 
for immediate development. 61 

The basic reason for the pessimistic view has been that vacant lots no longer are 
sold in any appreciable amount, nor will constant offering and continuous adver- 
tising induce the sale of such lots. There is in Chicago today within the corporate 
limits enough of vacant subdivided property to hold double the number of inhabit- 
ants Chicago contains at the present. 62 

Again in 1905 when the demand for State Street frontage was ex- 
traordinary, forty acres south of Jackson Park on Jeffery Avenue for 
which $10,000 an acre was offered in 1893 was sold for $3,125 an acre. 
At the same time, the depressed condition of the market for vacant 
land was shown by the following account : 

There are a large number of acre tracts in all sections to be purchased at prices 
far below anything that has prevailed for years. Instances can be cited where acre 
property can now be purchased at as low a figure as it sold for 25 years ago, but it 
is the uncertainty of a favoring gale creating a popular demand in one particular 
section for lots for improvement which makes buyers hesitate. One thing is quite 
certain and that is, that the kind of cheap lot trade which Chicago enjoyed prior to 
the World's Fair will not soon be duplicated in this section. 6 ^ 

Again after the panic of 1907 W. D. Kerfoot said: 

Ever since the panic of 1893, real estate has declined Whether real estate 

will show a decline depends upon affairs in the financial and commercial world in 
the next few months, but I do not look for any material change in conditions. The 
fact of the matter is that real estate is at about as low a figure now as it is possible 
for it to be> 

The condition of Chicago real estate was made but little worse by the 
panic of 1907, for it had been in a depressed condition in most localities 
for years, as the following account shows: 

Prices of real estate in any direction, with the exception of the North Shore and 
central business property, were higher fifteen years ago than now, while the popula- 
tion has increased by over a million people. It will thus be seen that there has been 
no active general market in any section such as characterized the period prior to 
1893. This is a favorite time for the small investors in the various specialties. If he 
wishes to buy acres, they can be had within a short distance of the heart of the city 
at one-third to one-fourth the prices prevailing fifteen years ago and as for single 
lots and houses, there never was a more opportune time. Acre and half acre lots in 
almost any direction are selling at about what a lot 25 by 125 feet [note: there are 

61 Ibid., November 26, 1904. 

63 Ibid., December 17, 1904: letter of Aaron McKay. 

63 Ibid., July 29, 1905. 6 < Ibid., December 14, 1907. 



A NEW ERA THAT FOLLOWED A WORLD WAR 219 

ten such lots in an acre] sold for years ago, with all the improvements in and with 
more convenient transportation. As to improved residence property in the older 
sections, many houses are for sale at a little more than the value of the land, and 
these can be bought on favorable terms. It should not be thought that these condi- 
tions are the result of the distress of the money market. They have prevailed for 
years; only the present seems a more favorable time to avail one's self of them. 6 * 

In this period subdividers could only sell vacant lots by building 
houses or apartments on them and selling land and building together. 
Although seventeen years had passed since the peak of 1890, there was 
no general boom in 1907, as there has been at seventeen-year intervals 
prior to 1890. Either the excesses of the boom of 1890 had produced an 
unusually long aftermath or else land values had not kept pace with the 
growth of the city. Figures 32 and 33 indicate the land values of 
Chicago in 1910. 

THE PERIOD FROM 1908 TO 1918 

In the period from 1908 to 1918, while the physical volume of pro- 
duction in the United States increased 50 per cent, the dollar value of 
manufacturers, wholesale trade, and bank clearings in Chicago doubled, 
as Table XI shows. 

At the same time, the indices of Chicago real estate activity (Table 
XII) indicate a high volume of building until 1917, a peak of transfers 
in 1916, and a peak of subdivision activity in 1914. Compared with 
1890, however, these were only minor peaks. 

In 1909 Chicago land values were on the whole lower than in 1890 
when the city was only half as large, and, according to William E. 
Harmon, they were no higher than other cities with half the population. 
Current writers gave their explanations as to why the prices of land 
fluctuated above and below what was warranted by the normal growth 
of the city. Thus W. L. Bonney said: 

Under existing conditions, the market prices of all commodities including real 
estate moves by a series of violent advances and reactions. This seems illogical 
but it is the process of price-making in any investment market. A quiet, steady, 
lady -like movement is unknown in commercial systems. This fact gives the specu- 
lator his trade and the investor his opportunity. In real estate this systole and 
diastole covers long periods, a decline continuing for many years and an advance 
running sometimes four or five years. The last decline in Chicago has persisted 
since 1893 and has carried prices down to a point as low as prices in Cleveland, 
Baltimore, Pittsburgh or Detroit. 66 

65 Ibid., November 16, 1907. M Ibid., August 28, 1909. 



MAP OF CHICAGO 



RESIDENTIAL LAND VALUES PER FRONT FOOT 

1910 



FRONT FOOT VALUES IN DOLLARS 



100 AND OVER 
50 TO 99 
26 TO 49 
4 TO 25 



BASED ON GEORGE C.OLC07T 
LAND VALUE MAP OF CHICAGO FOR 1910 



PREPARED BY HOMER HOYT 



ill 

iiiijijiiijiiji !:!!ii!!!2|iii;iiiil!ii!iiii;-Wi 




FIG. 32 



MAP OF CHICAGO 

-SHOW iNG- 
LAND VALUES -19 10 

AVERAGE VALUES FOR 960 ACRE TRACTS IN DOLLARS PER ACRE 
SOURCE : GEORGE C.OLCOTT'S LAND VALUE MAPS OFCHICAGO-I9IO 




-l T.* w 

-i-'""" ! 



300 ; 300 ;300 '. 



1380 ; 880 '3100 ! 9200 ' 11/440; 
! i 



11300 i v i ! 

9QCJ ?** | ; 2600 1 6700 j I3,eoq<! 600> ^ 1 0,700; 7000 



i A* 



75P' ! 650 | 850 i 2500! 31*00 1 1100 \ 2222>>I36 

' r-vi /I" -I i f"-^ 







FIG. 33 



222 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE XI 

ANNUAL AMOUNT OF BANK CLEARINGS, MANUFACTURES, WHOLESALE 

AND PRODUCE TRADE IN CHICAGO, 1908-18 

(Millions of Dollars) 



Year 


Bank 
Clearings* 


Value of 
Manufactures f 


Wholesale 
and Produce 
Trades! 


Wholesale- 
Price 
Index 


Index U.S. 
Production || 


1008 


$11,854 


$1,598 


$1,685 


92 


94 


IOOO 


I^.Q7Q 


,783 


1,89^ 


99 


106 


1910 

IQII. . 


13,930 
13,926 


,86 7 
> 213 


2,046 
2,027 


103 
95 


no 

105 


IQI2 


if 281 


078 


2 2o6 


IOI 


122 


IQII 


16 073 


000 


2 114 


IO2 


1 2O 


IQI4 


ic 603 


660 


2 122 


IOO 


no 


IQI5 


16, ioo 


, 724. 


2,28l 


IOI 


HO 


1016 


2O, ^4-2 


2,112 


2,841 


125 


110 


IQI7 


24.07^ 


2,48l 


3 ,2OO 


IC5 


141 


1018.. , 


2C.O^O 


3,044 


I,ll8 


183 


142 















* Economist, annual reviews. 

t Chicago Tribune, annual reviews. 

I Ibid. 

Wholesale-price index of Professors G. F. Warren and F. A. Pearson, from the Cleveland Trust Co. chart, 
"Business Activity and Four Price Series, 1831-1932." The average for the five years from 1910 to 1914, inclu- 
sive, is taken as 100. 

|1 Warren M. Persons, Forecasting Business Cycles (1931), pp. 137-47. Total production for 1905 is taken 
as 100. 



TABLE XII 

ANNUAL VOLUME OF REAL ESTATE TRANSFERS, NEW BUILDINGS, 
LOTS SUBDIVIDED, AND LONG-TERM LEASES 
IN CHICAGO, 1908-18 



Year 


No. of 
Transfers* 


No. of 
Bldg. 
Permits* 


Frontage 
New 
Bldgs.* 


Cost of 
New Bldgs.* 


No. of 
Lots Sub- 
divided in 
Cook 
County 


Long-Term 
Leases 
(Millions of 
Dollars) 


1908 
IQOO 


30,327 

7X O74. 


10,771 
1 1 241 


291,655 

HO 1^1 


$ 66,204,080 
oo ^oo ^80 


5,S6o 
7 06 1 


$ 7-4 
16 6 


IQIO 


11 847 


1 1 4OO 


127 l^O 


06 O12 7OO 


1 1 870 


o 8 


IQII 


30,620 


II 203 


10 s ; 126 


io<? 480 600 


9844 


21 O 


1912 . 


48, ^20 


11,157 


12O 157 


88 190 800 


IO 215 


I* O 


I9 J 3 
1914 


57,489 

59 , 660 


10,867 

9, 161 


320,889 
2QO.404- 


89,150,200 

82,947,200 


19,173 
20,211 


13-7 
8.6 


IQIS 
I9l6 . 


56,882 

6O, ^2O 


10,340 

IO 277 


318,011 

127 406 


97,301,480 

112 8^*! I ^O 


12,705 
12 017 


3-2 
I 


1917 


^4,677 


4.0l8 


161 608 


64. 244 i <co 


6,062 


IT O 


1918 


46,883 


2, 520 


85.610 


34, 701 ,8<;o 


2,010 


2 4 

















* Chicago Daily News Almanac. 



A NEW ERA THAT FOLLOWED A WORLD WAR 223 

Again he said: 

Another upward movement in the early nineties carried values some ten years 
ahead of real conditions. The city began rapidly to overtake these values while the 
values themselves began to fall back to meet real conditions. This process has gone 
on now for fifteen years. Since the World's Fair a new city has been added to each 
of the three sides of the river, wealth has accumulated, public improvements have 
been made, every token which goes to make a great metropolis has come into evi- 
dence, but the real estate pendulum has only begun to swing upward. 6 ? 

William B. Harmon explained the process in these words: 
Land values as distinguished from land prices grow almost exactly as population 
increases, for they are determined by the economic returns in rents when improved, 
while real estate prices are not determined by intrinsic values, but largely by senti- 
ment, so that prices and values do not necessarily, in fact, rarely mean the same 
thing. In 1889 everybody thought real estate prices would never stop going up, 
while now they are just as firmly convinced that they will never stop going down, 
and the facts in the case are that prices are actually beginning to recover, although 
within the past month we have bought real estate in your city at about one-half of 
what we would have paid for property with equal facilities in transportation and 
city improvements twenty years ago. Now economic realty values are way above 
the prevailing market. A lot of land in Chicago, properly improved, will return a 
net income double the amount of the income from property of equal cost in New 
York, Boston or the average American city. Conditions which apply in one part of 
the country do not apply in another. Real estate booms are local and reactions 
from booms are local. Land may be on a speculative basis in one city and far below 
its intrinsic value in another. Chicago has now entirely recovered from the wild 
speculation of the early nineties, and if nothing whatever was done to attract at- 
tention to real estate in your city, a buying movement would soon set in of its own 
accord which would bring about a renewed period of real estate activity. 68 

There were, of course, a few bright spots in this dark picture. Michi- 
gan Avenue from Randolph Street to Roosevelt Road took on a new 
aspect in the summer and fall of 1909 with the completion of the Black- 
stone Hotel, the McCormick Building, the People's Gas Building, and 
the Harvester Building. 69 Southward, on Michigan Avenue, the auto- 
mobile center was growing fast. Land values had doubled in the five 
years ending in 1909 along the line of the Northwestern elevated road 
from Wilson Avenue to Evanston. 70 Business corners in outlying 
neighborhoods such as Sixty-third and Halsted streets were reaching 
higher peaks than ever before. Office buildings were crowded to capac- 
ity. The West Side land near Madison and Halsted had reached the 

67 Ibid., July 24, 1909. ^ Ibid., November 27, 1909. 

68 Ibid., April 24, 1909. 70 ibid., March 13, 1909. 



224 



ONE HUNDRED YEARS OF LAND VALUES 



highest values in its history. Twenty-five houses had been built in the 
Kenwood district in four years. Factories continued to expand in the 
Calumet region. Such was the view in 1909. 

Central business district. By 1910 there was a lull in transactions in 
retail property in the Loop, the asking prices based upon leasing valua- 
tions being regarded as too high. 71 The rise in the interest rate from 4 
to 4^ per cent on downtown fees also tended to lower valuations based 
on 4 per cent capitalization rate. Rents for stores and offices were con- 
tinuing to rise, however. 

TABLE XIII* 

VALUE OF NEW OFFICE BUILDINGS ERECTED ANNUALLY IN 

CHICAGO COMPARED WITH TOTAL NEW 

CONSTRUCTION, 1908-15 



Year 


No. 


Cost 


Per Cent 
Total New 
Construc- 
tion 


Value of 
Property 
Long Leases 


1908 








$ 7 400 ooo 


I 909 . . 








i 6 600 ooo 


1910 


4.C 


$16,461 ,500 


17 O 


9 800 ooo 


1911 


48 


23, 101 ,000 


21 


3 i ooo ooo 


IQI2 


4.Q 


4t?7i OOO 


ST 


i <5 ooo ooo 


1913 
1914 


76 

72 


2 , 706 , 400 
2 <? 2O 4OO 


3-o 
30 


13,000,000 
8 649 800 


IQIS 


45 


4,2OO,OOO 


4-4 


3,230,000 



* Economist, June 3, 1016. The value of new construction as shown by permits from the 
records of the City Building Department of Chicago. 

In 1910 and 1911 there was a wave of office building in the Loop, 
which reached larger proportions than the skyscraper boom from 1890 
to 1892. From 1909 to 1914, inclusive, property of a value of over 
$94,000,000 was placed under long-term leases, a considerable part of 
which was due to office-building activity. Table XIII shows the extent 
of these operations which fell off greatly after 191 1. 72 

The rush to erect office buildings in 1911 was partly due to an ordi- 
nance passed in January limiting the height of buildings to 200 feet 
after September i. 73 The result of this office-building boom was to 
create another oversupply of space, and there were many vacant offices 
by the spring of 



71 Ibid., July 2, 1910. 

72 Ibid., June 3, 1916. 



73 Ibid., January 7, 1911. 
"M Ibid., April 19, 1913. 



A NEW ERA THAT FOLLOWED A WORLD WAR 225 

Land values on some of the streets that hitherto had been outside the 
main retail district reached peaks far exceeding the prices of 1890. 
Thus on Michigan Avenue at Congress Street was a lot under the Audi- 
torium Hotel that had been leased on a basis of $1,150 a front foot in 
1886 that was leased for $15,000 a front foot in iQi6. 7S Frontage on 
Wabash Avenue south of Madison Street that sold for $5,000 a front 
foot in 1899 was valued at $11,000 a front foot in 191 2. 76 The south- 
ward trend of business had become so pronounced in 1911 that frontage 
on State Street south of Van Buren sold for $7,300 a front foot. 77 The 
corner of State and Madison Street itself was valued at $300 a square 
foot in 1912, or over three times its value in iSgo. 78 

South Water Street continued to be the congested produce market 
with 154 firms between State and Lake Street requiring 800 teams to 
do their hauling, but there were several plans for a removal of this 
market to a new locality. 79 Plans for the widening of Roosevelt Road, 
for the new Field Museum, and for the Michigan Avenue link bridge 
were being discussed in 1915 and 1916, but the war intervened before 
they were started. 

The elevated lines were consolidated in 1911, and continued with the 
surface lines to pour a heavy volume of shoppers into the stores on 
State Street. In 1911 it was estimated that 1,350,000 passengers went 
in and out of the Loop daily on the surface and elevated lines, 1,000,000 
of these riding on the surface lines. 80 

Outlying business centers. At this time outlying transfer corners, or 
points where street-car lines intersected, came into prominence. A 
movement away from the retail stores in the central business district 
was inaugurated by the development of a new automobile center on 
Michigan Avenue south of Twenty-second Street where by 1911 there 
were twenty-six automobile showrooms between Twenty-second and 
Twenty-fifth streets. 81 Lots on Michigan Avenue near Twenty-second 
Street advanced from $200 a front foot in 1907 to $2,000 a front foot in 
1910 as a result. 82 

Of greater significance than this overflow from the Loop southward 
was the establishment of new community centers at points where 

nibid., August 19, 1916. nibid., February 27, 1915. 

76 Ibid., March 16, 1912. ** Ibid., January 7, 1911. 

77 Ibid., October 14, 1911. 8l Ibid., January 7, 1911. 
i*Ibid., April 6, 1912. 8a Ibid., July 2, 1910. 



226 ONE HUNDRED YEARS OF LAND VALUES 

street-car lines intersected or near elevated railway stations. Several 
factors contributed to the establishment of many small business centers 
outside the central nucleus in the Loop. The first was the movement 
on the part of chain stores to seek retail outlets near where the con- 
sumers lived. Forty outlying stores could be rented at the same cost 
as one store on State Street. In 1910 the Columbia drug stores leased 
twenty-five transfer corners, which of course commanded a higher 
rental than the ordinary neighborhood store. 83 The Atlantic and 
Pacific Tea Company, the United Cigar Store, and other chain organ- 
izations also began to establish stores in every neighborhood. The second 
factor was the building of theaters outside the Loop. At first vaude- 
ville houses, whose performances were inferior to the Loop theaters, 
and then showings of moving pictures that were the same as those 
displayed downtown induced people to seek their entertainment near 
their homes. The third factor was the growth of neighborhood banks. 
Prior to the World's Fair there had been only one bank outside the 
Loop, that at the Stock Yards, but at this time many banks were or- 
ganized to do business in the new community centers. The fourth fac- 
tor was the moving of manufacturing plants and wholesale houses 
away from the downtown area, with the result that new communities 
formed near them. Even when the factories or plants did not move, 
as in the case of the Stock Yards, the higher class of employees sought 
to get away from the noise and odors of the industrial district as well 
as from the old neighborhoods occupied by unskilled laborers of the 
new immigration or of the colored race. The fifth factor was the charac- 
ter of the transportation system. As the population moved farther out 
and away from the railroads and elevated lines, more reliance was 
placed upon the surface cars. While these street cars were adequate to 
carry people to and from outlying factories and neighborhood centers, 
they were a slow medium for reaching the Loop. Thus, as a result of a 
drift of population away from the downtown area, neighborhood cen- 
ters with their own stores, banks, and theaters began to develop at this 
time. Within another decade the movement reached its apex. 

The growth of these community business centers was reflected in the 
rise of land values at transfer corners. The corner of Sixty- third and 
Cottage Grove Avenue, valued at no more than $400 a front foot at the 
peak of the World's Fair boom, was sold for $640 a front foot in 1906 

83 Ibid., June n, 1910. 



A NEW ERA THAT FOLLOWED A WORLD WAR 227 

and leased for $1,400 a front foot in 1909, and for $3,398 a front foot in 
I9i2. 84 The corner of Sixty- third and Halsted Street was leased for 
$2,873 a front foot in i9i3 8s as compared with $1,754 a front foot in 
i9io. 86 The corner of Lawrence and Kimball increased in value from 
$52 to $300 a front foot from 1909 to 1912, and by 1918 it sold for 
$606 a front foot. 87 Triple intersections along Milwaukee Avenue ac- 
quired a high value. The corner of Lincoln, Robey, and Irving Park, 
bought for $25 a front foot in 1904, was leased for $900 a front foot in 
191 2. 88 The corner of Milwaukee, Western, and Armitage was leased for 
$9.00 a square foot in i9io. 89 Corners beyond the settled area, if at 
the intersection of two actual or potential car lines, began to ac- 
quire a speculative value. The corner of Sixty-third and Western 
Avenue was sold for $282 a front foot in i9ii. 9 The corner of Sixty- 
third and Kedzie Avenue sold for $400 a front foot in i9i3- 91 At 
the same time the corner of Devon and Western was bought for $177 a 
front foot and that of Belmont and Cicero for $50 a front foot, both 
representing great advances over previous acre values. 92 The corner of 
Madison and Crawford was leased for $972 a front foot in i9i3- 93 The 
corner of Lawrence and Kedzie rose in value from $53 a front foot in 
1911 to $433 a front foot in i9i5. 94 Lincoln Avenue between Leland 
and Lawrence increased from $100 a front foot in 1909 to $1,000 a 
front foot in 1915. 9S Seventy-ninth and Halsted corner advanced from 
$530 a front foot in 1911 to $924 in 1912. The first fervor of transfer 
corner speculation began to abate in 1913 and it was not renewed gen- 
erally until after 1919. 

Growth of new neighborhoods. New neighborhoods were being built 
in all sections of the city. The Washington Park race track, from Sixty- 
first to Sixty-third streets, Cottage Grove to South Park Avenue, closed 
as a result of the anti-betting law of 1905, was subdivided and built up 
almost solidly from 1908 to 1912. 96 Near Seventy-ninth and Racine 150 
new houses had been built from 1906 to 19 io. 97 In Avalon highlands, 



id., April 3, 1909; December 31, 1912. 9I Ibid., October n, 1913. 

85 Ibid., April 19, 1913. 92 Ibid., November 8, 1913. 

86 Ibid., July 9, 1910. M Ibid., September 20, 1913. 

8 7 Ibid., April 6, 1912; April 20, 1918. 9 * Ibid., January 2, 1915. 

88 Ibid., July 6, 1912. 9S Ibid., April 17, 1915. 

89 Ibid., November 19, 1910. * Ibid., February i, 1913. 

90 Ibid., October 14, 1911. w Ibid., November 19, 1910. 



228 ONE HUNDRED YEARS OF LAND VALUES 

southeast of Seventy-ninth and Cottage Grove Avenue, 150 houses had 
been built from 1911 to 1915. 98 In 1915 a new city was being built south 
of Jackson Park east of Stony Island Avenue." The region near Archer 
and Kedzie was being settled in 1914 as a result of the establishment of 
the Crane plant near there, 100 and land values tripled in the two years 
from 1913 to 191 5. 101 A new residence section was being developed north 
of Diversey to Belmont on the Lake Shore Drive in 191 5- 102 The entire 
North and Northwest sides were growing fast. The relatively rapid 
growth in the outer zone of the city from 1906 to 1916 is shown by the 
increase in the number of telephones. While the number in the Loop 
increased from 33,000 to 83,000 and in the inner zone from 27,659 to 
54,538, the number in the outer zone rose from 50,240 to 274,147. The 
increase was greatest in Irving Park, Rogers Park, and Edgewater, 
with advances of 907, 346, and 343 per cent, respectively. 103 In the pe- 
riod from 1910 to 1916, while the population within the first four miles 
of the corner of State and Madison Street remained almost stationary 
at slightly more than 1,000,000, the population from four to seven 
miles from this center increased from 460,000 to 1,076,000. In the 
same interval the population in the belt from seven to ten miles from 
the center increased from 180,000 to 332,ooo. 104 

Acre and subdivision activity. In the beginning of this period, sub- 
division activity, notwithstanding the doubling in the population of the 
city from 1890 to 1910, had not recovered from the aftermath of 1890. 
In 1910 sales of acre tracts on the South Side were made at prices far 
below the levels of 1890. The accompanying tabulation shows the 
level of values in 1910, with the corresponding values for 1890. 

1910 1890 

Devon-Western $800 an acre $i ,000 

Sixty-third-Cicero 600 2,000 

Seventy-ninth-Racine .... 900 3 , 500 

Belmont-Laramie 550 750 

Forty-seventh-Crawford. . 350 2,000 

The very fact that sales were made indicated an awakening of activ- 
ity. Acre tracts on the North Side began to advance in value. By 1913 
land at Devon and Kedzie sold for $3,125 an acre, an advance of 300 

<* Ibid., April 3, 1915. 10X Ibid., March 27, 1915. 

Ibid, (annual review), 1915. Ibid., February 6, 1915. 

100 Ibid., November 28, 1914. 103 Ibid., April 6, 1916. 

IO - Report of the Chicago Traction and Subway Commission (1916), p. 73. 



A NEW ERA THAT FOLLOWED A WORLD WAR 229 

per cent in three years. 105 Elston Avenue south of Diversey had sold 
for $5,000 an acre in 1897, but it brought $21,000 an acre in I9i2. 106 
Subdivision activity increased. Frederick H. Bartlett bought 1,727 acres 
in the Clearing district in 1910 for $500 an acre, 107 and in this tract he 
sold 800 lots for $100,000 in one day. 108 Lots were being sold at Sixty- 
third and Western Avenue, sales of $300,000 being made in a short 
time during i9i2. 109 In 1914 lots were being sold south of Jackson 
Park, at Seventy-ninth and Cottage Grove, at Archer and Kedzie 
avenues, and on the Northwest Side. In the fall of 1914, at the south- 
west corner of Seventy-ninth and Cottage Grove in the new subdivision 
called " Chatham Fields," 894 lots out of a total of 1,146 were sold in 
five weeks for $994,000." Subdivision activity declined after 1914, but 
in 1917 Frederick H. Bartlett sold 2,694 out of 2,994 lots in "Greater 
Chicago" at One Hundred and Third Street and the Illinois Central 
Railroad, and he reported total sales for the year of over $6,ooo,ooo. IXI 
William Britigan sold 2,629 lots of a value of $4,187,621 in 1917, but 
to make these sales it was necessary for his 53 employees to make 
169,456 telephone calls, to make 5,000 automobile trips, and to use 
1,399,835 pieces of advertising." 2 The automobile, the telephone, and 
widespread advertising were means now used by trained sales organiza- 
tions to sell lots. Only a few large firms were successful in stimulating 
an interest in buying lots, and even their efforts were almost suspended 
by the outbreak of war. Prior to 1918 speculation in lots and acre tracts 
had only a mild revival that was not comparable as a whole to the ac- 
tivity in 1890. There had, however, been slow and persistent gains 
year after year on the North Side since 1900 and spectacular rises in 
values at transfer corners. 

Fashionable residential areas. The ultra-fashionable residential area 
was extending northward along the Lake Shore Drive from Diversey to 
Belmont Avenue in 1915. The Lake Shore Drive near Division Street 
had reached values of over $2,000 a front foot, and the spread of fine 
homes to As tor Street had raised its values in a few years from $200 to 
over $1,000 a front foot." 3 

105 Economist, January 22, 1910. 

106 Ibid., May 14, 1910. " Ibid., September 19, 1914. 

10 7 Ibid., September 3, 1910. IZI Ibid., February 2, 1918. 

108 Ibid., June 28, 1910. lu Ibid., January 5, 1918. 

109 Ibid., June 22, 1912. "* Ibid., November 14, 1914. 



230 ONE HUNDRED YEARS OF LAND VALUES 

Meanwhile, the old mansions on Prairie Avenue continued to be sold 
at a fraction of their original cost. A house near Eighteenth and 
Prairie Avenue that cost $200,000 was sold with 81 feet of ground for 
$25,000. A home at Twenty- third and Calumet Avenue that cost 
$150,000 and was the finest in the city in 1870 was sold with 120 feet 
of ground for $36,000. This was in ipog." 4 The old homes on Ashland 
Boulevard on the West Side met the same fate. These commodious 
houses were too large to be maintained when the servant problem be- 
came acute, and it was becoming the fashion to live in apartments and 
not to imitate the castles of the feudal barons. 

Old residential areas. Old houses near the Loop were used for board- 
ing-houses or torn down to make way for warehouses. The old "red 
light" district at Twenty-second and State Street was abolished in 1912, 
and with it went the exceptionally high rents paid for the use of the 
property for immoral purposes. The expansion of warehouses soon 
gave it a prospective commercial value as high as that for the old use, 
however. 

Manufacturing and warehouse districts. Manufacturing districts 
were growing and increasing in value in this period. The land in the 
Central Manufacturing District bought for $900,000 in 1900 was valued 
at $15,000,000 in I9i5." s The Clearing district, where the railroad 
transfer yards saved a day getting freight in and out of Chicago, was 
acquiring new factories. The Crane plant moved from Roosevelt and 
Canal streets to Kedzie near Thirty-ninth Street in 191 2, II6 and as it 
gave employment to fifty-seven hundred men, it created a new settle- 
ment in that prairie region. The Kenwood manufacturing district was 
established at Forty-seventh and Kedzie Avenue. The industries of 
the Calumet region and of South Chicago continued to grow as the 
traffic on the Calumet River became the main stream of water-borne 
commerce entering Chicago by 1916. Iron, steel, chemicals, beds, ce- 
ments, tile, railroad equipment, musical instruments, corn products, 
spirits, oil, and food products were all manufactured there. 

Apartments. Apartment building was the leading type of new con- 
struction in 1915, as Table XIV shows. As a result of this extensive 
building of apartments, thirty thousand houses and apartments were 
reported vacant in i9i2," 7 and apartment rents declined in 1913. Nev- 

., November 20, 1909. Il6 Ibid., November 23, 1912. 

., April 24, 1915. " 7 Ibid., September 13, 1913. 



A NEW ERA THAT FOLLOWED A WORLD WAR 



231 



ertheless, a new peak of apartment building was reached in 1915 when 
apartments with sun parlors became the vogue. The one-room apart- 
ment made its debut in the Wilson Avenue district in 191 6." 8 

Review of the market as a whole, 1908-18. In 1910, notwithstanding 
record high values in the Loop, at Michigan Avenue near Twenty-sec- 
ond Street, along the North Shore, and at certain street-car intersec- 
tions, the prices of outlying acre tracts were lower than they were 
twenty years before. A large volume of property sold at bankruptcy 

TABLE XIV* 

NUMBER AND COST OF NEW APARTMENT BUILDINGS COMPARED 

WITH NEW SINGLE-FAMILY RESIDENCES CONSTRUCTED 

IN CHICAGO, 1910-15 



YEAR 


APARTMENT BUILDINGS 


SINGLE-FAMILY 
RESIDENCES 


No. 


Cost 


Per Cent 
Total 
Construction 


Cost 


Per Cent 
Total 
Construction 


IQIO 


4,362 
4,599 
4,767 
5,034 
4,729 
4,47 


$34,372,500 
36,401,000 
43,619,000 
39,565,800 
40,632,000 
59,567,750 


34-4 
34-8 
49-0 
44.0 
48.8 
61.2 


$ 8,379,300 
8,535,500 
8,198,000 
9,159,500 
10,862,500 
10,500,000 


8-5 
8.0 

9-3 

IO.2 
12.0 

10.8 


IQI I 


IQI2 


IQI3 


IOI4. . 


IQIC 





* Economist, June 3, 1916. From records of the Building Department of Chicago. 

and foreclosure sales could still be bought at bargain prices. High office 
rents stimulated a large volume of new construction in the Loop in 
1910 and 1911. Apartment construction continued in large volume 
from 1910 to 1916, although there were many vacant apartments in 
1916. Transfer corners rose sharply in value from 1909 to 1913, when 
the movement slackened for the time being. From 1911 to 1917 sub- 
division activity revived to a moderate extent. Land south of Jackson 
Park began to rise in value after 1915, and throughout this period there 
was a steady gain in land values north and northwest. From 1910 to 
1918 the average land values of Chicago rose 50 per cent," 9 but there 
was nothing resembling a boom. After 1916 rents remained stationary 

Il *Ibid., April i, 1916. 

" Herbert D. Simpson, The Influence of Public Improvements on Land Values, Annals 
of American Academy (March, 1930), p. 128. 



232 ONE HUNDRED YEARS OF LAND VALUES 

while operating costs advanced with prices. The outbreak of war re- 
duced building activities to a low ebb. 

C. THE PERIOD FROM IQIQ TO 1933 

Survey of the general factors affecting urban land in the United States, 
1919-26. In each of the preceding chapters of this study there was pre- 
sented a spectacle of an exuberant and rapid rise of land values during 
which the energies and hopes of the entire population of the city were 
raised to the highest pitch, followed by the painful decline in the same 
values that checked this ardent activity and brought disillusionment 
and despair to great masses of people in Chicago. The newly created 
wealth in the form of higher land values, which seemed so solid and 
substantial when it was buttressed by bank loans and when it was 
readily convertible into cash, was seen first to lose its liquidity and 
then much of its value in each of these successive land cycles of the past. 
As a result of the continued remarkable growth of the metropolis by 
the lake, a recovery in the real estate market after every depression 
carried land values as a whole to higher peaks with each successive 
boom and caused later generations to overlook the preceding valleys in 
which their fathers and grandfathers had floundered. In this last peri- 
od, the facts as to the rise and fall of Chicago land values since the end 
of the World War are still too recent to be forgotten. Those who have 
witnessed the fifth act of this century-long drama almost doubt the 
evidence of their senses. It seems impossible that such changes could 
have occurred in so short a time, and if people had not seen with their 
own eyes what has occurred, they would not have believed it. 

The United States has just passed through a period similar in many 
respects to that " gilded age" following the Civil War. There was that 
same striving for sudden wealth on the part of the masses of the people, 
and that same financial manipulation on a grand scale by men like 
Krueger and Insull. Men were dazzled by the rising skyscrapers and 
the new comforts of living. It seemed to be a new era in which poverty 
in the United States was to be forever banished. Then the whole struc- 
ture toppled down like a house of cards, and today we look back on it 
as a bubble or a mirage. 

Wealth in the form of land or buildings which seemingly rests on so 
secure a physical foundation in fact depends on the ability of landlords 
to maintain gross rents above operating costs for long periods in the 



A NEW ERA THAT FOLLOWED A WORLD WAR 233 

future. When a combination of circumstances increases the net income 
of landlords for a short time, however, people seem always to proceed 
immediately to the conclusion that this profitable situation will endure 
for years to come. Land values are capitalized not merely on the new 
basis, but even on the assumption that the profit margin of landlords 
will continue to increase. Taxes are levied, bank loans are made, and 
long-time commitments are entered into on this new basis, until the 
whole financial structure of society is involved in the support of the 
newly created land values. This situation is brought about not merely 
because of the increase of the spread between gross rents and operating 
costs which makes land at least temporarily a profitable investment, 
but also because of the pressure of funds seeking investment. When the 
banks are able to expand their loans with ease and wage-earners are ac- 
cumulating surplus funds in large volume, if opportunities for employ- 
ment of such savings do not exist, they tend to be created. Instead of 
the rate of interest being forced down by the large supply of capital, it 
is sustained by the manufacture of new enterprises which appear to be 
much safer than they really are. Money that was ostensibly being 
poured out for investment purposes with the expectation of an annual 
interest payment was used to pay wages, financing costs, commissions, 
brokers' fees, etc., on so high a basis that future rents could not possibly 
be high enough to yield a return on this inflated load of costs. 

The fortuitous circumstances that operated to raise and lower the 
value of urban and rural land in the United States since the beginning 
of the World War will now be described. Land, together with the build- 
ings upon it, represented in 1922 over one-half of our total national 
wealth. 120 Therefore the fluctuations in so important a species of prop- 
erty could not fail to affect our entire financial and industrial structure. 

Urban land in the United States was generally depressed during the 
World War. The depression of 1914 had slowed down a mild revival in 
Chicago real estate and had cut short land booms in the cities of the 
Canadian Northwest and in New York City. The war turned world- 
demand away from housing to the production of munitions and food- 
stuffs to supply the armies in the field. While the prices of American 
farm products more than doubled from 1914 to 1918, average house 
rents in the United States rose only 9 per cent. The result was that 
the value of American farm land, which had doubled from 1900 to 1910 

120 U.S. Census of Wealth, Debt and Taxation (1922). 



234 ONE HUNDRED YEARS OF LAND VALUES 

as a result of slowly rising prices of agricultural products, doubled 
again from 1910 to 1920, reaching a total value in the latter year of 
$55,ooo,ooo,ooo. 121 In Iowa, in the heart of the corn belt, the boom in 
farm lands carried sales prices to $500 an acre by 1920. 

Then came the remarkable reversal in the relative position of urban 
and rural real estate. Whereas in 1920 all the urban land in cities over 
30,000 in the United States had a value of scarcely over $25,000,000,- 
ooo, or half that of the value of farm land, by 1926 the value of all farm 
land had dropped from $55,000,000,000 to $37,000,000,000, while the 
value of urban land in American cities over 30,000 population had risen 
from $25,000,000,000 to over $50,000,000,000. The area of land within 
these cities was only one-fifth of i per cent of all the land in the United 
States, and yet it was valued in 1926 at 33 per cent more than that of 
all the farm land in the United States, whose area was two hundred 
times as great. 122 The cause of this great shift was due to a double set 
of forces, one acting to depress the value of farm lands and the other to 
elevate the value of urban lands. 

American agriculture and American farm-land values were depressed 
as a result of the disappearance of the extraordinary combination of 
factors, behind the war-time demand for American foodstuffs. Austral- 
ian wheat, mainly unavailable during the war because of the long route 

121 U.S. Census (1910, 1920). 

122 The value of urban lands within the corporate limits of cities of 30,000 population 
and over in the United States is an approximation computed by the writer by two inde- 
pendent methods. The first method is based on per capita land values. Zangerle found that 
the average per capita land value in nine cities in 1921 was $756 (John A. Zangerle, Prin- 
ciples of Real Estate Appraising [Cleveland, 1924], p. 229). These nine cities were New 
York, Boston, Pittsburgh, Cleveland, San Francisco, Cincinnati, Baltimore, Milwaukee, 
and Detroit. The population of all American cities over 30,000 in 1920 was 36,705,911. 
Applying the average per capita land value in the nine cities to the entire urban population 
would give a total urban land value of $27,750,000,000. It may be objected to this method 
that per capita land values are higher in the larger than in the smaller cities, and that ap- 
plying the average for these large cities to the smaller ones would result in too high a figure. 
It will be observed, however, that some very large cities were not included in the nine cities 
taken by Zangerle, and that Chicago, Philadelphia, Los Angeles, St. Louis, New Orleans, 
Minneapolis, St. Paul, Kansas City, Atlanta, Washington (D.C.), Seattle, Portland (Ore.), 
Columbus, Toledo, Louisville, Newark, Jersey City, Indianapolis, Akron, Denver, Bir- 
mingham, and many other large cities were omitted. The twenty-one cities specifically 
mentioned that were omitted had a population of approximately 10,800,000 in 1920, or 
about the same population as the nine cities taken by Zangerle. 

To check this method another one is employed. The U.S. Federal Trade Commission 
in their estimate of the national wealth in 1922 do not give a separate estimate for urban 



A NEW ERA THAT FOLLOWED A WORLD WAR 235 

through the submarine zone, and Argentine wheat, withheld for lack of 
ships, were again poured into the markets of Europe. Continental 
European countries, with the war veterans back on the farms, needed to 
import less. It was discovered that large surplus stocks of many com- 
modities were piled up in warehouses at the close of the war, and there 
was a sudden and sharp decline of commodity prices in 1920. The agri- 



land, but they do give a total figure for all land apart from buildings of $122,000,000,000. 
By a process of elimination, an estimate may be made for urban land. The following items 
are subtracted from the total to give the urban land only in 1920: 

Source 

Improved farm land (est. in 1922) $40,000,000,000 U.S. Census for 1920 

Land owned by public utilities 6,000,000,000 Federal Trade Commission* 

City streets 9 , ooo , ooo , ooo Federal Trade Commission* 

Forest land, 493,000,000 acres, $20 an acre 10,000,000,000 Writer's estimate 

Arid land, pasture land, rocky peaks, country 
roads, not included above, 400,000,000 acres at 
$10 an acre 4,000,000,000 Writer's estimate 

$69,000,000,000 
* 1922 figures of the Federal Trade Commission. 

Subtracting the $69,000,000,000 from the total of $122,000,000,000 would leave $53,000,- 
000,000 for all the land in all the villages, cities, and towns in the United States. If one- 
half of this value is assigned to the value of land in cities and towns over 30,000 in popula- 
tion, and to any other possible forms of land wealth omitted in these deductions, a figure of 
approximately $26,000,000,000 would be derived for the value of land in cities over 30,000 
population. This would seem to be an extremely high figure to be deducted but the esti- 
mate for urban land value here presented is believed to be ultra-conservative and to err 
on the side of understatement rather than overstatement. 

So much for the method of arriving at the urban land values for 1921. Using another 
method, it was found by the writer that the sales value of land in Chicago in 1926 was 
$1,500 per capita. In New York City the assessed value of $8,000,000,000 for the land alone 
in 1926 is $1,250 per capita, and this was probably below the sales value. It is believed that 
$1,200 per capita would have been a conservative value for all the land in cities over 30,000 
population in the United States in 1927. The population on July i, 1929, in such cities was 
44,318,900. On the basis of a population of 42,000,000 for these cities in 1927, the value of 
this urban land would have been slightly over $50,000,000,000. 

The foregoing computation is far in excess of the estimate of the value of urban land in 
the United States in 1920 made by W. R. Ingalls in his Wealth and Income of the American 
People, who put the amount at only $13,800,000,000. This estimate did not include vacant 
urban land, but, even so, it seems far too low. The basis of calculation seems to be wrong, 
for the author arrives at it by first computing the value of urban buildings at $65,100,000,000 
by a very rough method of calculation and then by assuming that land under those buildings 
represents one-fifth of the value of the building alone. It is true that a 5 to i ratio between 
buildings and land has frequently been assumed as a normal ratio, but lots under stores and 
at the business centers of our great cities are frequently valued as high as the buildings. 
There are also large areas occupied by old and obsolete buildings where the value of the 
land is higher than that of the buildings. In the 1928 assessment of land and buildings in 
Cook County, land and buildings were assessed at equal value. It is true that the land 



236 ONE HUNDRED YEARS OF LAND VALUES 

cultural depression began in 1921 and, as farm-land values declined, 
many banks failed in rural sections, particularly in Iowa where the 
farm-land boom had been most intense. 

On the other hand, the return of five million soldiers and sailors from 
army camps and ships to their homes and opportunities for employ- 
ment in large urban centers caused an increase from 1920 to 1930 of 
nearly nine million in the population of American cities of over thirty 
thousand population. The pent-up demand for luxuries after the rigors 
of war started a revival of manufacturing and wholesale trade. There 
was also a great increase in the demand for personal service, for real 
estate brokers and bond salesmen, for operators of beauty parlors and 
attendants at gasoline filling stations, and for advertising and insurance 
agencies. The center of the demand was in the large cities. As the 
flood of migration came from the war camps and the country districts to 
the urban centers, which as a result of the war-time restrictions on build- 
ing and the high prices of building materials had had practically no resi- 
dential building in 1917 and 1918, an acute housing shortage developed. 
As a result of this population pressure, apartment rents in most Ameri- 
can cities doubled from 1919 to 1924. Meanwhile, average construction 
costs in the United States had dropped from 270 in 1919 to 165 in 1921 
and the cost of operating buildings had increased but slightly. The 
first result was that the net income of the owners of existing buildings 
greatly increased; and as the buildings could no longer be reproduced at 
their pre-war cost, the capitalized value of the income of existing urban 
buildings, their reproduction cost, and their sales value all rose sharply. 
The second result was that it became very profitable by 1921, as a re- 
sult of rising rents and falling construction costs to erect new buildings. 
The absorption of vacant land for buildings and the higher net return 
left to the owners of land under existing buildings caused urban land 



figure included much vacant land, but this land is on the average of far less value than that 
under buildings. 

That Ingall's estimate is far too low is also indicated by the study of the Federal Trade 
Commission and the U.S. Census of Wealth, Debt and Taxation. After deducting known 
items of the value of land represented by farms, there is still a large amount left, which 
can hardly be accounted for except on the assumption that it is mostly urban land. Fur- 
thermore, Zangerle computed the land value of nine cities with a population of 11,300,000 
to be $8,550,869,757 in 1921. If Ingall's estimate were correct, there would be left only 
$5,300,000,000 plus the value of the vacant land in the nine cities to represent the value of 
the urban land in all the other cities and towns in the United States. It could hardly have 
been that low. 



A NEW ERA THAT FOLLOWED A WORLD WAR 237 

values in the United States to double between 1919 and 1926. A wide- 
spread sale of real estate bonds, based on these higher values to a public 
educated to buy bonds by the Liberty Bond campaigns, resulted in a 
sale of ten billion dollars' worth of such securities by 1929. Such was the 
general situation in the United States which existed during the period 
of the last real estate boom in Chicago. 

The growth of the trade and manufactures of Chicago, 1921-29. The 
trade and manufactures of Chicago had a substantial but not a re- 
markable rate of growth from 1921 to 1929. In these eight years of 
relatively stable wholesale prices, the dollar value of manufactured 
products and of bank clearings increased 50 per cent. 123 In the period 
from 1921 to 1926, surface and elevated traffic increased 25 per cent 
while the number of new telephones installed and the dollar value of the 
wholesale trade increased 50 per cent. 124 Truly spectacular gains, how- 
ever, were registered by the radio industry, the motion-picture indus- 
try, and the automobile trade. From 1920 to 1930 the number of auto- 
mobiles in Chicago increased 400 per cent. 125 In the same period the 
amount of electricity generated for Chicago consumers increased 133 
per cent. 126 

The growth in real estate factors, 1919-26. Outstripping the rate of 
growth of manufactures, banking, transportation, and the wholesale 
trades in this last period was the growth of population, building, sub- 
division activity, and land values. From 1918 to 1926 the population of 
Chicago increased 35 per cent, the land values increased 150 per cent, 
the value of new buildings as indicated by permits increased 1,000 per 
cent, and the number of lots subdivided in the Chicago Metropolitan 
Region increased 3,000 per cent. 127 

I2 * "Chicago Manufactures," U.S. Census; Chicago bank clearings from a typewritten 
statement prepared by the Chicago Clearing House Association. 

I2 4 Elevated traffic from a letter from the receiver of the Chicago Rapid Transit Co.; 
surface-line traffic from the eighteenth annual report of the president of the Chicago Sur- 
face Lines for the year ending January 31, 1932; telephones installed from a letter dated 
July 23, 1932, from the statistician of the Illinois Bell Telephone Co.; wholesale trade 
value in 1918 from Chicago Tribune Annual Review of Business given at $3,338,175,100, 
value in 1926 given as $4,484,761,000 by Mr. Scott of Carson, Pirie & Scott as coming from 
the Census of Distribution. 

MS Figures furnished by the City License Department of Chicago. 

126 Year Book (Chicago: Commonwealth Edison Co., 1931). 

12 ? Land-value increase as computed by the writer; the value of new buildings as indi- 
cated by permits issued by the Building Department of the city of Chicago. 



238 ONE HUNDRED YEARS OF LAND VALUES 

Population increase. The first of these phenomena to show its effect 
was the increase in population. The population of Chicago, according 
to estimates based on the enrolment in the grade schools, had remained 
almost stationary from 1916 to 191 y. 128 Then a population tide, com- 
posed of the influx of negro workers from the south, returning soldiers 
and sailors, and white workers from smaller cities or rural sections, 
poured into Chicago, until, with the increase of births over deaths, there 
was a total gain of 910,000 persons from 1917 to 1927. All of this in- 
creased population and in addition 150,000 persons who left the old 
residential areas within four miles of State and Madison Street, or a 
total of 1,060,000 persons, settled in the outer belt beyond the limits of 
the territory settled by 1880. The entire effect of the population in- 
crease was felt by the new areas, whose population increased from 
1,552,500 to 2,670,000 from 1917 to 1927, while the inner territory de- 
clined from 848,500 to 700,000 in the same period. 129 In this old area 
outside the Loop and the near North Side, there was practically no new 
construction in these years, but in the new expanding territory from 
1919 to 1929, inclusive, there were erected buildings with a street front- 
age of 730 miles, which would fill a solid area of 25 square miles, if al- 
lowance were made for streets and alleys and back yards. 

The building boom. The remarkable migration of population then 
caused a building spurt that began in 1919 and continued to a peak in 
1926, from which it tapered down gradually to 1928 and then began a 
precipitous decline. This feverish spurt of new construction was caused 
by the doubling of Chicago apartment rents from 1919 to 1924, the in- 
crease of 80 per cent in office rents, 130 and the rise in retail store rents 
from 100 to 1,000 per cent at the same time that operating costs were 

128 The method employed is that described by Earle Young, American Journal of Soci- 
ology, February, 1933. The number of pupils enrolled in the grade schools of June of each 
year is taken from the records of the Board of Education. The ratio between the total popu- 
lation of Chicago according to the U.S. Census in 1910, 1920, and 1930 and the number so 
enrolled in the grade schools was respectively 7.84 to i, 7.708 to i, and 7.638 to i. The 
ratios for the intercensus years are derived by interpolating on the straight-line method, and 
the ratios so obtained are multiplied by the school enrolment in the grade schools in June 
of each year to give the population. As there is no great change in the ratio for these three 
census periods, it is believed that this method will produce fairly reliable results for this 
period. The results seem to agree with facts derived from general observation. 

" The area of this map is denned as the area which declined in population from 1920 to 
1930 (see Fig. 82, p. 357). 

^ Earl Shultz, "What of the Future" in Proceedings of National Association of Build- 
ing Owners and Managers (1931), p. 521. 



A NEW ERA THAT FOLLOWED A WORLD WAR 



239 



rising only 10 per cent. 131 The curve of gross income and operating 
costs, which had begun to come close together in 1919, sprang far apart, 
as Figures 34 and 35 show. 132 With rapidly advancing rents, practically 
no vacancies, and almost stationary operating costs, the owner of an 
apartment building in Chicago had a bonanza from 1920 to 1929. The 
value of old two-apartment buildings in all sections of Chicago that 



FLUCTUATIONS IN THE NET INCOME OF 

A CHICAGO APARTMENT BUILDING 

1907- 1931 




sold for $6,000 in 1918 readily sold for from $12,000 to $15,000 in 1926. 
The Chicago index of building costs declined from 258 in 1920 to 210 
in I922. 133 New buildings were nearly always sold at a substantial profit 
above the land and building cost. Bungalows costing $5,000 to con- 

1 3 1 Rise in store rents taken from records of McKey & Poague for Sixty-third Street 
near Cottage Grove. 

J 3 2 Chart based on the records in the office of the Business Manager of the University of 
Chicago. Operating expenses include taxes. 

'33 HolaUrd and Root Index, on basis of 1888 = 100. 



240 



ONE HUNDRED YEARS OF LAND VALUES 



struct sold for $7,500. Profits of $25,000 and $50,000 were made on 
single multiple-apartment buildings. Since the entire cost of the build- 
ing could often be borrowed, it is little wonder that there was a rush 
into the building field analogous to a Klondike gold rush. 

The rapid absorption of vacant land by new buildings and the high 
earnings of existing buildings made possible by the purchasing power 

FLUCTUATIONS IN THE NET INCOME OF 

AN OFFICE BUILDING IN CHICAGO 

1905-1932 

(BUILDING WAS CONSTRUCTED IN 1893) 




FIG. 35 

of post-war urban labor, which was reflected in high apartment rents 
and high store rents, caused a boom in vacant land. This reached its 
most hectic phase in 1925 and the early part of 1926. 

SURVEY OF MOVEMENT OF CHICAGO LAND VALUES BY REGIONS 
AND TYPES OF PROPERTY 

Such are some of the broad and general factors behind the movement 
of Chicago land values from 1919 to 1926. It is now necessary to de- 
scribe that movement by regions and by types of property. The ensu- 



A NEW ERA THAT FOLLOWED A WORLD WAR 241 

ing discussion will concern itself, first, with the central business district 
of Chicago; second, with the near North Side; third, with the old area 
settled before 1880; fourth, with the outlying business centers; fifth, 
with new tall apartment buildings along the lake; sixth, with areas oc- 
cupied by three-story apartment buildings; seventh, with bungalow 
and small-home areas; eighth, with outlying industrial property; and, 
ninth, with subdivision vacant land and outlying acreage. 

i. Central business district. In the building boom from 1924 to 1929, 
the central business district of Chicago expanded both vertically and 
laterally. The limitation on the height of buildings was raised in 1923 
to permit the erection of towers. Above the old twenty- two-story pla- 
teau of the Loop, nearly a score of new pinnacles of from thirty-five to 
forty-six stories formed a new skyline. Notwithstanding the monu- 
mental appearance of these tower buildings when viewed from the 
ground, the floor area in this upper stratum above the twenty-two- 
story level was in 1933 only 2 per cent of the entire floor area in the 
Loop. 

At the same time that the central business district of Chicago was 
making its pioneer ventures into the layers of air ranging from 264 feet 
to 560 feet above the city datum, it was sending outposts beyond the 
orbit of its iron-bound circuit of elevated lines. The commission houses 
along the south bank of the main channel of the Chicago River were 
cleared away, and the entire frontage along this new double-decked 
Wacker Drive was made available for the raising of a new crop of sky- 
scrapers westward. On the bank of the south branch of the river was 
completed in 1930 the huge Civic Opera Building. Southward on Mich- 
igan Avenue beyond Harrison Street was erected in 1928 the Stevens 
Hotel, which, with its three thousand rooms and three thousand baths, 
is the largest hotel in the world. Northward, across the river at Wolf's 
Point, the gargantuan Merchandise Mart, occupying two city blocks 
of air-right property over the railroad tracks, achieved the distinction 
in 1930 of being the largest building yet erected by man. Eastward, 
near the site of old Fort Dearborn, several towering office buildings 
arose, and the plans for a huge colossus that was intended to bestride 
the tracks of the Illinois Central Railroad and to rise to a height of forty 
stories was only blocked by the inability to secure a special ordinance 
authorizing such a behemoth. Thus in the optimistic days of that 
"new era" which came to an end on October 24, 1929, the Chicago 



242 ONE HUNDRED YEARS OF LAND VALUES 

Loop surged upward and outward, and the air castles of promoters and 
the dreams of architects became realities in steel and stone. 

The spreading-out of the central business district in this period tended 
to prevent the extreme rise in land values which might have occurred 
if the new office buildings had been concentrated in a small area. The 
average increase in Loop land values from 1910 to 1928 was only 62 
per cent, a moderate gain compared with that registered by the out- 
lying sections of the city. Extraordinary prices were indeed paid under 
leasehold agreements for certain corners in the Loop, but such transac- 
tions were not regarded as fair criteria of the market value even at the 
time. The promoters agreed to lease a corner at extravagant figures, 
because they could float a bond issue and erect a building on the 
strength of their leasehold without any cash investment of their own. 
The subsequent forfeiture of the twenty-two-story building at the 
southwest corner of Clark and Madison streets for failure to pay the 
ground rent indicated that the leasing value of $50,000 a front foot for 
this corner was far too high. 

2. The near North Side. The central business district of Chicago, 
which in previous booms had been pulled southward by the influence of 
fashionable homes on Prairie, Calumet, and Michigan avenues, received 
a powerful tug from the North Side when the center of fashion shifted 
to the Lake Shore Drive. The effect was slow to manifest itself, how- 
ever. The growth of the Gold Coast on the North Side had proceeded 
far by 1900, but the northward thrust of the Loop did not come until 
the Michigan Avenue bridge was opened on May 14, 1920. Michigan 
Avenue on the South Side, which had hitherto come to an end in the 
maze of wagons on South Water Street, was opened through to the 
North Side and a new thoroughfare was carved through the middle of 
the old boarding-house section on the near North Side. The new dou- 
ble-decked Michigan Boulevard became the busiest automobile high- 
way in Chicago. While the last vestiges of obsolete houses fronted the 
lower level of the street, the newest and finest examples of skyscraper 
architecture presented themselves to the fashionable throngs passing 
along the upper deck of the new avenue. The rise in land values that 
followed this almost magical transformation of a decadent rooming- 
house district into an annex of the central business district was sensa- 
tional, increases of from two to twenty-five dollars a square foot in land 
values in two years being common. 



MAP OF CHICAGO 



DISTRIBUTION OF BUILDINGS 

SEVEN STORIES HIGH OR OVER 

1933 



LEGEND 

o? TO 12 STORIES HIGH 

12 STORIES HIGH OR OVER 



,.*" : / : / 

! - -!-;" . _: /...^._/.:._ 

TOr !/! 




FIG. 36 



244 ONE HUNDRED YEARS OF LAND VALUES 

3. Tall apartment buildings. In this period from 1922 to 1929, a 
fringe of tall apartment buildings from seven to twenty- two stories 
high grew up along the lake front on the North Side, and on the South 
Side from Fiftieth to Fifty-sixth streets and from Sixty-seventh to 
Seventy-ninth streets. 134 Wealthy families who had formerly lived in 
mansions on Prairie Avenue or the Lake Shore Drive moved into de 
luxe apartments. People in more moderate circumstances moved from 
larger apartments of the older types into small furnished kitchenette 
apartments, where one or two rooms were made to serve as dining-room, 
kitchen, and living-room. The great increase in the number of women 
employed in shops and offices had lessened the number of hours spent 
at home, as had also the increase in the habit of spending leisure hours in 
driving automobiles, in attending motion-picture shows, and in playing 
golf. Small, compact, quarters in which all services were provided for 
came to be preferred to the old roomy houses of the nineteenth century, 
which required a retinue of servants to maintain and the constant 
supervision of the mistress of the house. Other powerful factors oper- 
ating to reduce the size of living quarters was the decline of the birth- 
rate, the decrease in the size of the average family, and the increasing 
number of childless couples and of single persons. The large apart- 
ment buildings also offered advantages in the form of dining-rooms, 
parlors, and swimming pools, and they afforded opportunities of social 
intercourse for the residents. Thus it became convenient and also 
fashionable to live in a high building along the Lake Shore rather than 
in an old-fashioned home with ample grounds, and to such an extreme 
was this carried before 1929 that as much rent was paid for one room in 
one of these buildings as for six or seven rooms in steam-heated apart- 
ment buildings that were a little older and not so tall. 

The large incomes that were for a short time derived from tall apart- 
ment buildings, and the ease of borrowing money to build them, caused 
them to be erected in large numbers from 1922 to 1929. The construc- 
tion of these buildings, which ranged in height from six to twenty 
stories, in neighborhoods previously occupied by three-story structures 
led to a revaluation of all land in the vicinity on the basis of this 
"higher and better use." The percentage of the total land occupied by 
these tall buildings was small, however, and did not exceed one-third 

** See Fig. 36 on distribution of buildings seven stories or more in height. 



A NEW ERA THAT FOLLOWED A WORLD WAR 245 

of the eligible ground area in the immediate vicinity even in the case of 
the Belmont Harbor district. 

4. Two- and three-story apartment building areas. Encircling the old 
settled areas of the city, and filling in vacant prairie tracts between the 
communities along the railroads, there arose in this period thousands of 
apartment buildings two and three stories high. These varied in size 
from the "two-flat" building to the court or corridor building that con- 
tained forty-two or more separate apartments. The distinguishing, 
characteristic of the entire class was the lack of elevators and of the 
steel and concrete fireproof construction which were required in taller 
buildings. The principal subclasses were the "two-flat," designed to be 
sold to individuals who desired a home and an income, and who pro- 
vided janitor service to their single tenant; the "three-flat," which re- 
quired a slightly heavier initial investment by the purchaser; the "six- 
flat"; the "twelve-flat," on a fifty-foot corner lot; and the larger apart- 
ment buildings containing eighteen, twenty-four, thirty-six, or forty- 
two living units. Apartment buildings containing less than twelve 
apartments were considered as semi-investments, as the maintenance 
and building cost per room were higher in buildings where one steam 
boiler served only two apartments than where it provided heat for 
forty residential units. 

The more intensive use of land for apartment buildings caused a, 
rapid rise in land values in outlying residential areas between 1921 and 
1926. Vacant prairie tracts, such as Devon and Western avenues, the 
Windsor Park golf course, Chatham Fields, Avalon highlands, Law- 
rence and Kimball, and North Avenue and Austin, were covered with 
rows of new buildings in a few years. Table XV shows the rise in land 
values that took place in some of the new apartment areas between 
1910 and i928. I3S 

5. Bungalow areas. In the period following the World War, one 
hundred thousand bungalows were erected in Cook County on the 
cheaper land beyond the apartment areas. Land in bungalow areas 
did not reach as high a level as that in apartment districts, but the gain 
in the new areas was nevertheless large, as Table XVI shows. 

6. Old residential areas. Outside of the central business district of 
Chicago is a belt of old houses in which population is declining and 

135 Computed by George C. Olcott from his Land Values Blue Books of Chicago. 



246 



ONE HUNDRED YEARS OF LAND VALUES 



vice and delinquency increasing. This so-called "blighted area" has 
had practically no new residential buildings for thirty or forty years, 
and land values rose but slightly in the boom that culminated in 1926, 
as Table XVII shows. 

TABLE XV 
LAND VALUES IN APARTMENT AREAS IN CHICAGO, 1910-28 



BOUNDARIES OF AREA 


FRONT-FOOT VALUE OF INSIDE RESIDENTIAL LOTS 


IQIO 


1915 


1920 


IQ2S 


1928 


Howard-Devon, Lake Michigan- 
Ashland 


$47-20 
5-00 

14-95 
23-2S 
6.25 

16.35 


$97-oo 
14.00 

21.28 
37-35 
iS-45 
18.00 


$141 .00 

21.12 
30.80 
43-40 
19.60 
30.30 


$377-50 
70.50 

107.35 
143-05 
50.30 
73-45 


$466.25 
118.00 

I5I-95 
243-65 
116.55 
i53-oo 


Devon-Foster, Western-Kedzie . . . 
Foster-Irving Park, Kedzie-Craw- 
ford 


Kinzie-Roosevelt Road, Cicero- 
Central 


Seventy-fifth-Eighty-seventh, 
State-Cottage 


Seventy-fifth-Eighty-seventh, 
Brandon- Yates 





TABLE XVI* 
LAND VALUES IN BUNGALOW AREAS IN CHICAGO, 1910-28 



BOUNDARIES OF THE AREA 


FRONT-FOOT VALUE OF INSIDE LOTS 


IQIO 


1915 


1920 


1925 


1928 


Diversey-North, Crawford-Cicero 
Roosevelt-Twenty-sixth, Central- 
Ridgeland 


$11.65 
7-75 
3-35 
8.65 


$20.80 
12.50 
17.40 
12.90 


$25 . 60 
20.00 

24-15 
13.00 


$51-90 
51-75 
44.80 
27.20 


$71-30 
75-90 
73-45 
66.28 


Fifty-first-Sixty-third, Western- 
Kedzie 


Eighty-seventh-Ninety-ninth, Hal- 
sted Ashland 





* Computed by George C. Olcott from his Land Values Blue Books of Chicago. 

7. Industrial areas. The period following the World War was fea- 
tured by the continuation of the shift of factories and industrial plants 
away from the territory adjacent to the Loop to new specialized in- 
dustrial districts along belt-line railroads such as the Clearing, the 
Kenwood, and the Healy districts. The advantage of cheaper land, 
which in turn permitted one-story construction with continuity of 



A NEW ERA THAT FOLLOWED A WORLD WAR 



247 



TABLE XVII 

VALUE OF RESIDENTIAL LAND IN OLD SETTLED AREAS 

OCCUPIED BY MEDIUM-GRADE HOMES 

(Dollars per Front Foot) 



Location Street 


1800* 


iQiof 


iQiSt 


I929f 


193 1 J 


South Side: 
Broad n. Archer . . 


$ 65 

4 
26 

40 

2 8 
85 
62 

44 
40 
26 
56 
68 
54 

g 

48 
40 
48 
52 

23 


$ IS 

40 
40 

20 
20 
70 
25 

50 
25 
25 

12 
48 
20 

45 
40 

1 

40 
40 

20 


$15 
40 
35 

25 
22 

50 
30 
35 
So 

3 

45 
30 
70 
40 
30 
45 
30 
30 
28 


$ 20 

8 

25 

32 

55 



40 
So 

20 

75 
32 
75 
40 
40 
50 
So 
50 
45 


$ 20 

25 

35 

12 

2O 
40 
25 
25 
2O 
20 

g 

20 
40 
25 

35 

25 

40 
40 
25 


Buffalo s. Eighty-eighth 


Carpenter s. Fifty-sixth 


Green Bay n. Ninety-first 


Justine s. Forty-ninth 
Langley s. Forty-seventh 
Paulina n. Thirty-fifth 


Shields n. Thirty-second 


Thirty-fifth e Auburn 


Thirty-sixth e. Gage 
Thirty-sixth w. California 


Thirty-seventh e. Archer 


Thirty-seventh e. Parnell 


Twenty-third w. Wentworth 
Twenty-seventh w. La Salle 
Twenty-ninth w. Stewart 


Vernon s. Thirty-seventh 


Wallace s. Thirtieth 


Wallace s Twenty-ninth 


Wood s. Fifty-first 


Average 


$ 49.40 

$93 

44 
30 



S6 
% 
^ 

30 

30 


& 

60 
65 

8 

27 

11 

55 


$ 34-50 

$60 

40 

& 

So 
40 
40 
40 



35 
35 

8 

36 

zoo 

40 
80 
40 

n 

50 
4 o 

55 


$ 34-60 

$ 55 

45 

00 

65 

40 
40 
45 



40 
30 
30 
70 
40 
125 
45 
125 
50 
66 
38 
80 
45 
55 


$ 45-40 

$ 80 

50 
70 
80 
70 
40 
75 
55 
50 
60 
70 
40 

Is 

45 
125 

45 

IOO 

70 

IOO 

70 
90 

60 

IOO 


$ 28.85 

$35 
40 
20 
65 
40 
40 
70 
35 
35 



30 
40 
So 

il 

& 

70 

IOO 

82 

So 
45 
55 


North Side: 
Blackhawk w. Larrabee 


Bissell s. Clay 




Evergreen s. Milwaukee 
Front (Fry) w Sangamon 


Holt n. Blanche 


Hoyne s. Thomas 


Huron e Paulina 


Huron e. Hoyne 


Grand e. Robey .... 


Iowa w. Rockwell 


Lyndale w. Robey 
Lill e. Perry (Greenview) 
Noble n. Ohio 


Ohio w. Robey 




Robey n. Grand 

Sangamon s Austin 


Sheffield n. Clay 


Smith cor. Blackhawk 
Washtenaw cor Iowa 


Willow w. Burling 


Wood s. Thomas 




Average 


$ 52.70 

$50 
So 
70 
92 
40 
27 
83 
Si 


$ 48-50 

$30 
40 
30 
40 
32 

8 

40 


$ 55 -40 

$35 
50 
35 
50 

S 

70 
40 


$ 70 

$40 
80 

40 

! S 

2 S 
60 

70 
45 


$ 50.20 

$35 

35 

50 
40 
45 
44 
60 
45 


West Side: 
Fifteenth e. Wood 


Fifteenth e Union 


Eighteenth e. Western 


Fisk s Sixteenth 


Flournoy e. Francisco 


Fourteenth cor. Lincoln 
Laflin s Polk 







* The 1890 figures are from sales tabulated by M. L. Putney, Land Values and Historical Notes of Chicago 
(1890). 

t The figures for 1910, 1915, and 1929 are from George C. Olcott, Land Values Blue Books of Chicago (1910, 
1915, 1929). 

J The figures for 1931 are from the assessed value of land in Cook County for 1931. 



248 ONE HUNDRED YEARS OF LAND VALUES 

TABLE XVII Continued 



Location Street 


1800* 


igiof 


I9i5t 


IQ2Qt 


193 it 


West Side (continued) 
May s Eighteenth 


$ 44 


$ 60 


$ 60 


$ 60 


$ 40 


Nineteenth e. Western 


44 


40 


40 


45 


40 


Nutt (Loeffler) s. Sixteenth 


7O 


35 


45 


70 


40 


Park (Maypole) w. Western 


60 


35 


30 


70 


35 


Sixteenth e. California 


48 


30 


45 


50 


45 


Sixteenth e Wood 


66 


30 


25 


40 


40 


Thirteenth w Robey 


64 






AC 




Thirteenth w. Paulina 


& 

83 


4> 
60 





65 


30 


Troy n. Twenty-fifth 
Twentieth e Albany 


48 

27 


25 
20 


40 

35 


55 
50 


30 
3? 


Twentieth w. Lincoln 


48 


50 


50 


40 


40 


Twentieth w. May 


63 


60 


60 


60 


40 


Twenty-first e Paulina 


64 


45 






75 


Twenty-first w. May 
Washtenaw near Fourteenth 
Washtenaw s. Fulton 


60 
30 
33 


40 
30 
30 


40 

35 
35 


70 
45 
65 


75 
35 
30 


Spring s Canalport 


51 


40 


60 


70 


2 5 














Average 


$ 55 


$ 40 




$ 56 50 


$ 41 .50 















plant operation, lower taxes, direct freight-car service into the plant, 
a better lot layout for industrial purposes, and closer contacts with as- 
sociated and complementary industries, favored the growth of these 
outlying industrial areas. As a result, land values of industrial tracts 
rose faster in these newly developed tracts than in the old districts near 
the Loop. This is shown by Table XVIII. 

TABLE XVIII 

VALUE OF LAND IN INDUSTRIAL AREAS, 1910-29 
(Per Square Foot Except as Otherwise Indicated) 



Boundaries of Areas 


1910 


1915 


1918 


1921 


1925 


1929 


New Districts 


Healy manufacturing district-Fuller- 
ton Crawford 


$ 0.03 
600* 

0.25 
0.03 
0.15 
0.05 


$ O.IO 

800* 

0.60 

O.IO 

0.30 

0.25 


$ 0.30 
1,000* 
1-25 

O.I2 
0.40 
O.4O 


$ 0.65 
1,000* 
1-25 

1. 00 

0.40 

I.IO 


$ 0.85 
1,500* 
1-35 

I .00 

0.65 

I .00 


$ 1.25 
3 , Soo* 
3.00 

I .00 

0.80 

I.OO 


Clearing, Sixty-fifth-Seventy-first- 
Cicero to Harlem 


Central manufacturing district-Thir- 
ty-ninth-Ashland, sw. cor 
Kenwood-Forty-seventh and Kedzie . 
Cicero-Division 
Forty-seventh-Western, ne. cor 

Jackson-Monroe, Halsted-Morgan . . 
Calumet River, Ninety-ninth-One 
hundred and sixth 


Old Districts 


$250f 


$ 44 ot 
o .30 


$ 425t 


$425t 
0.25 

6.00 
i .10 
5.00 
5.00 


$ 43of 
0.25 

6.67 
i. 20 
6.00 
S-oo 


$ Soof 
0.30 
7.00 

1.20 

6.00 
5.00 


North Branch, east bank Kinzie- 
Chicago 


4-33 
0.90 

IO.OO 

5.00 


5-33 
i .00 
8.00 
5.00 


5.67 

I .00 

8.00 
5-oo 


South Branch at Morgan 
State-Sixteenth 


South Branch, Roosevelt-Sixteenth. . 



* Per acre. 



t Per front foot. 



A NEW ERA THAT FOLLOWED A WORLD WAR 249 

8. Outlying business centers. As Table XX shows, the average value 
of outlying business corners doubled between 1910 and 1915, and then, 
as the rising prices of building materials and the war halted new con- 
struction, remained stationary from 1915 to 1921. The rapid growth of 
population in the outlying areas from 1921 to 1927, however, caused 
the upward course of values to be resumed until the sales prices of the 
major corners tripled on the average between 1921 and 1928. Not only 
did an increase of population of one million in these newly developed 
territories, combined with employment at high wages, furnish added 
consumer purchasing for local stores, but a number of factors tended to 
divert much of this shopping away from the Loop to these community 
centers. The rapid growth of outlying banks furnished depositories for 
local funds and collected neighborhood savings for reinvestment in 
local building projects. The new palatial motion-picture houses fur- 
nished the same entertainment that was afforded in the Loop. The 
Walgreen Drug Store, the Woolworth or Kresge Store, or the Gold- 
blatt or Wieboldt Department Store offered a wide choice of merchan- 
dise. Hence the residents in these new areas, finding it increasingly 
difficult to park their automobiles in the downtown area, came to prefer 
to do their banking, shopping, and to seek their entertainment close to 
home. 

As a result, store rents in some of the major outlying centers increased 
1,000 per cent from 1915 to 1928. The gain in land values on the full 
section line streets that were traversed by car lines and that were 
zoned for business or upon the radial streets that were main thorough- 
fares exceeded the increase of any other type of property. The inter- 
section of two full section lines, where two street-car lines usually 
crossed, produced a peak of land values because these so-called double- 
section or transfer corners commanded exceptionally high rents as loca- 
tions for drug stores, cigar stores, and banks. The competition among 
rival department-store chain organizations for good locations as a 
means of swelling their volume of sales and thereby to enable them to 
sell more of their securities caused rents to advance above what other 
lessees could afford to pay. The bidding of rival banks, drug stores, and 
cigar stores for corners was likewise keen, and in several instances 
transfer corners were leased by one organization for the purpose of 
keeping them out of the hands of a rival concern. In the prosperous 
times prior to 1929, many clerks set themselves up in business and for 
a while did a profitable trade. All of these factors caused business areas 



250 



ONE HUNDRED YEARS OF LAND VALUES 



to expand and store rents to rise. Large office buildings were erected on 
some of the outlying corners, so that the development was intensive as 
well as extensive. 

LAND VALUES ON 79 STREET - STONY ISLAND TO CRAWFORD AVENUES 
1910, 1928,1931 




Lawrence Avenue on the North Side and Seventy-ninth Street on the 
South Side ran through the center of zones of maximum population in- 
crease, and the rise in land values for the entire length of these streets 
shown in Figures 37 and 38 probably exceeded that of any other streets 



A NEW ERA THAT FOLLOWED A WORLD WAR 



251 



in the city. Hundreds of outlying corners, however, rose into the 
thousand-dollar-a-front-foot class in the boom from 1921 to 1926. 
Table XIX shows the course of land values on a number of prominent 



LAND VALUES ON LAWRENCE AVENUE 
1910, 1928,1931 




FIG. 38 

corners. Figures 39 and 40 indicate graphically the increase in the 
value of such corners between 1910 and 1928. Table XX gives the 
average value of 1,700 outlying business corners at 425 different street- 
car intersections, showing the increases from 1910 to 1929. In 1910 



252 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE XIX* 

VALUE OF LAND AT PRINCIPAL OUTLYING BUSINESS CORNERS 

OF CHICAGO, 1910-29 

(Dollars per Front Foot) 



Location 


IQIO 


IQI5 


1918 


IQ2I 


1925 


1929 


South Side: 
Fif ty-third-Lake Park 


$ 250 


$ 750 


$ 750 


$1 ,000 


$1 , COO 


$ 2, 7 (CO 


Sixty-third-Halsted 


I ^OO 


5OOO 


5 OOO 


4 OOO 


9 ooo 


IO OOO 


Sixty-third-Cottage 


7"?O 


I 7 co 


I 7^0 


2 OOO 


5 OOO 


7 OOO 


Sixty- third Ashland . . . . 


7:50 


I , ^OO 


I C.OO 


I 3 ^O 


2 OOO 


3 OOO 


Sixty- third- Western 


IOO 


7^O 


OOO 


800 


I 7 "sO 


2 ,OO 


Sixty-third Kedzie 


7C 


400 


700 


600 


I , CQO 


2 OOO 


Seventy-first- Jeff ery 
Sixty-seventh-Stony Island . 
Ninety-second-Commercial . 
One Hundred and Eleventh- 
Michigan 


IOO 
IOO 

450 


IOO 

750 

1,500 

700 


500 

I, OOO 

1,500 

700 


400 

900 

1,500 
800 


1,300 

3,000 
2,500 

2 OOO 


2,250 

4,000 
4,000 

4 ooo 


Seventy-ninth Cottage . . . 


20 


300 


300 


2OO 


I C.OO 


3 7">O 


Seventy-ninth Halsted . . . . 


600 


1 ,000 


1 ,000 


1 ,000 


2 C.OO 


4cno 


Seven ty-ninth-Ashland 
Forty-seventh- Ashland 
West Side: 
Madison Kedzie 


IO 

800 

COO 


400 
1,500 

2 OOO 


500 
1,750 

I 'JOO 


400 
1,750 

I 7^0 


1,250 

3,000 

2 <.OO 


2,500 

4,000 
3 POO 


Madison Crawford 


SOO 


OOO 


I IOO 


I 2 <O 


2 2 C.O 


7 OOO 


Madison Cicero 


2<O 


, 2OO 


1 ,000 


800 


2 OOO 


2 'JOO 


Roosevelt-Halsted 


2,OOO 


, c,oo 


2 , C.OO 


2 C.OO 


3 OOO 


5 OOO 


Roosevelt-Kedzie 
Roosevelt Crawford 


500 
600 


,500 
,OOO 


1,500 

1 ,000 


1,750 
I ,OOO 


2,500 

I , ^OO 


4,000 

2 C.OO 


Madison- Ashland 


7OO 


,OOO 


1 ,000 


800 


I , ">OO 


2 , tCOO 


Lake-Marion, Oak Park 
North Side: 
Chicago Ashland 


175 
IOO 


175 
7^0 


175 

I OOO 


2OO 
I OOO 


1,000 

I 7^0 


2,250 
3 OOO 


Milwaukee-Division 
North-California 
North-Milwaukee 
Clark-Center 


I,2OO 
150 
500 
I ^.O 


3,500 
1,500 
1,500 

-2QO 


3,000 
1,250 
1,500 

2QO 


4,000 

1,000 

1,750 

C.OO 


5,000 

2,000 
2,000 
2 OOO 


5,000 
2,500 

2,000 
2 2 C.O 


Milwaukee-Western 
Logan Square 


2OO 

i cn 


1,250 
600 


1,250 
600 


I , 2 5o 

7C.O 


2,OOO 
800 


2,250 
I 7^O 


North-Crawford 
Grand-Harlem 
Broadway-Clark 
Lincoln-Belmont 
Milwaukee-Cicero 


60 

500 

750 
25O 


1,250 
150 
500 
2,OOO 
I ,OOO 


1,000 
200 

800 

2,500 

1 ,000 


1,000 

200 

900 

2,250 

I , IOO 


2,OOO 
600 
2,000 

4,000 
i ,7 co 


3,000 
1,250 
3,ooo 
6,000 
3 1 7^o 


Lawrence B roadway 


IOO 


I 2 "CO 


I 7^0 


2 OOO 


4 OOO 


5C.OO 


B roadway Wilson 


300 


2,OOO 


2. 2C.O 


2 7 to 


6 ooo 


5C.QO 


Wilson Sheridan 


I<O 


I . C.OO 


1 , 7 CQ 


2, C.OO 


6 ooo 


C, COO 


Lawrence-Sheridan 
Lawrence- Western 
Lawrence-Kedzie 


125 

2OO 

50 


375 
800 
500 


675 

800 

750 


I,OOO 
900 
I ,OOO 


2,500 
1,700 
2,000 


4,250 
3,500 

3,000 


Lawrence-Kimball 
Lawrence-Milwaukee 
Devon-Sheridan 
Devon-Western 
Howard Paulina 


ISO 
60 
2OO 

4.O 


700 
500 
750 

IOO 

oo 


700 
500 
750 

J 5o 

2 CO 


700 

450 
600 
250 
22 ^ 


1,500 

1,200 
2,OOO 
I,OOO 
I OOO 


2,750 

2,000 
3,000 
2,000 

2 ^OO 

















George C. Olcott, Land Values Blue Books of Chicago (1910, 1915, 1918, 1920, 1925, and 1929). 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES OF THE PRINCIPAL 
BUSINESS CORNERS OUTSIDE THE LOOP 
1910 



VALUES PER FRONT FOOT 

$ 200-$ 499 

500 - 999 

1,000- 2,499 

2,500- 4,999 
A 5,000 - 10,000 



PREPARED BY HOMER HOYT FROM 

OLCOTT'S LAND VALUE MAPS 

OF CHICAGO -1910 




FIG. 39 



MAP OF CHICAGO 

-SHowiNG- 
VALUES OF THE PRINCIPAL 
BUSINESS CORNERS OUTSIDE THE LOOP 
1928 



VALUES PER FRONT FOOT 

$ 200-$ 499 

500 - 999 

1.000- 2,499 
2.500 - 4.999 
5.000 - 10.000 







PREPARED BY HOMER HOYT FROM 

OLCOTT'S LAND VALUES BLUE BOOK 

OF CHICAGO -1929 



[; I.---*" 
-- =* i t-~ 4-*-t~"+-*- 
t * . .^-- v 
"+ f- ^ -^-----^"--f----0^H w '" r V" jr '' ffr 

^l^i|4^44if,_ 

i J I i t v V^ \ 



-'-->'-->-- 




FIG. 40 



A NEW ERA THAT FOLLOWED A WORLD WAR 



255 



only 52 corners at 13 different street-car intersections were valued at 
one thousand dollars or more a foot, but by 1929 the number of one- 
thousand-dollars-a-foot corners had increased to 816 at 204 different 
intersections. 

9. Subdivision and acreage tracts. Prior to the boom of 1925, most 
of the land within the city limits of Chicago had been subdivided as 
Figure 41 shows. In this last boom, however, nearly all of the remain- 
ing areas that were not industrial were converted into lots. The far 
northwest and the far southwest corners of the city limits and the Calu- 

TABLE XX* 

AVERAGE VALUE OF THE LAND AT 425 STREET- 
CAR INTERSECTIONS IN CHICAGO, 
1910-29 



Year 


Per Front Foot 
Average 


Index Numbers 
1910= 100 


1910 

IQIS 
1920 


$ 222 

444 

A A A 


IOO 
2OO 
2OO 


IQ2C 


880 


4.OO 


IQ2Q 


1 , 202 


582 









* George C. Olcott, Land Values Blue Books of Chicago (1910, 
1915, 1920, 1925, and 1929). 



met region were platted and offered to lot-buyers. The boom did not 
stop with the city limits, however, but went far beyond them. When 
the extension of the rapid transit system to Niles Center and the Skokie 
Valley was announced in 1925, the prices of acre tracts jumped from 
$500 to $3,000 an acre overnight. A belt of land three miles wide was 
subdivided along the North Shore for forty miles to Waukegan and 
even to the Wisconsin State line. The uninterrupted advance of the 
North Shore since 1900 make this territory the most fruitful of all for 
the subdivider. Other sections were not neglected, however. A line of 
new subdivisions was opened along the line of the Chicago & North- 
western Railroad past Arlington Heights to Barrington and Lake 
Geneva. The extension of the rapid transit lines to Westchester and 
the growth of the western suburbs led to the opening of new subdivi- 
sions along Roosevelt Road and the new electric line as far west as 
Wheaton. Southward, the electrification of the Illinois Central Rail- 



MAP OF CHICAGO 



SUBDIVISIONS 
I860 TO 1932 



LEGEND FOR DATA 

feggg AREAS SUBDIVIDED BEFORE I860 
{iB-j AREAS SUBDIVIDED FROM I860 TO 1685 
AREAS SUBDIVIDED FROM I886TO 1893 
YZJftft AREAS SUBDIVIDED FROM 1894 TO 1899 
[~~~] AREAS SUBDIVIDED FROM 1900 TO 1915 
HH AREAS SUBDIVIDED FROM I9I6TO 1929 




FIG. 41 



A NEW ERA THAT FOLLOWED A WORLD WAR 257 

road to Matteson caused developments at Ivanhoe, Flossmoor, and as 
far south as Two Hundredth Street. Southeastward, a new rapid trans- 
it line to Michigan City and South Bend paved the way for develop- 
ments of several thousand acres along the lake near Michigan City. 
Southwestward, the new automobile highways opened up new tracts as 
far away as One Hundred and Twenty-seventh and Harlem Avenue. 

The supply of lots that was thus thrown upon the market in 1925 and 
1926 quickly exceeded any possible demand, but great organizations 
employing systematic tactics realized over $100,000,000 from the sale 
of lots in 1925 alone. The public was canvassed by telephone men who 
called nearly every person listed in the telephone directory and sought 
to make an appointment with a salesman. Salesmen were hired to 
make sales among the circle of their acquaintances. Free train rides 
and free lunches lured the prospect to the property where promises of 
a safe investment coupled with a great speculative profit led many peo- 
ple of small means to invest their life-savings. The prices obtained for 
these lots, on down payments varying from 20 to 33 per cent of the pur- 
chase price, were from three to ten times the current boom price for 
large tracts of land, and frequently two to three times as high as the 
current price of subdivided lots adjoining the new subdivision, but 
purchasers in this artificial market were afforded little time to make 
comparisons. 

The sale of lots by subdividers did create a speculative market for 
acreage tracts. Farms were bought to sell to subdividers or to other 
speculators on the basis of what the land would sell for if subdivided 
less the cost of marketing it. Thus the suburban area for forty miles or 
so from Chicago felt the stimulus of the speculative boom. 

In these subdivisions, "business corners" sold for high prices, and an 
unduly high percentage of land was designated as business land or 
apartment or high-grade residential land, for it was evident that these 
more intensive uses afforded greater opportunities of profit-making. 

THE CHICAGO REAL ESTATE MARKET AS A WHOLE, IQ2I-2Q 

In the Chicago real estate market as a whole, these various factors 
just described interacted or furnished a succession of stimuli to land- 
buyers. Different types of properties and different sections of the city 
and suburbs competed for the favor of purchasers, and some territories 
lay dormant while other areas were enjoying booms. 



258 ONE HUNDRED YEARS OF LAND VALUES 

The advance in real estate began with the rise in the value of old 
apartment buildings, which, as a result of rising rents and higher build- 
ing costs, more than doubled in value from 1919 to 1926. As an exam- 
ple of the general upward movement, two-apartment buildings that sold 
for $7,000 in 1919 brought $15,000 in ig26* 36 The movement spread to 
the building of stores and apartment buildings of the walk-up type, in 
which great profits were made by speculative builders from 1921 to 
1925. A rapid rise in business and apartment lots ready for building 
then began. By the spring of 1925 a great subdivision and acreage 
boom was under way and real estate was most active in all its phases 
building, subdivision, acreage sales, business leases in all sections from 
the Loop to the forty-mile suburban radius. In the fall of 1926 the 
collapse of the Florida boom helped to put a damper on the excessive 
subdivision and speculative activities in vacant land. The building of 
large office and apartment buildings continued with undiminished ardor 
in 1927 and 1928, however, and the competition of chain stores for 
space caused land values to rise in established business centers like 
Sixty-third and Halsted Street and Madison and Crawford. The gen- 
eral market was growing dull, however, and while there were no reces- 
sions in asking prices, it was becoming more and more difficult to sell 
for cash, and a general trading in equities began. 137 Lot-buyers began 
to default on their contracts and second-mortgage holders to foreclose 
in 1928 and the early part of 1929. The last business sections to enjoy 
booms were the Davis-Orrington section in Evanston, where the ad- 
vance continued to the fall of 1929, and the Lake-Marion section in 
Oak Park where it continued even into 1930. On October 24, 1929, 
however, a great crash in the stock market terminated the "new era" 
of uninterrupted profits and unchecked speculative advance. 

Chicago land values at the peak. The sales value of the land in the 
city limits of Chicago increased from two billion dollars in 1921 to five 
billion dollars by I928. 138 This increase in the site value of the city was 

J 3 6 According to sales reported by Chicago real estate brokers. 

J 37 According to the statements of numerous real estate brokers. 

^ Computed on the basis of the values in George C. Olcott, op. cit. The correctness of 
this computation is checked by another method. The 1928 assessment of land in the city 
of Chicago was $3,710,000,000 full value. According to estimates made by Professor 
Herbert Simpson in his book, Tax Racket and Tax Reform, and also by the writer, this assess- 
ment was approximately 75 per cent of the full sales value, which would give the sales value 
as five billion dollars for 1928. 



MAP OF CHICAGO 

-SHOWING- 

RESIDENTIAL LAND VALUES PER FRONT FOOT 

1926 



FRONT FOOT VALUES IN DOLLARS 

HH 100 AND OVER 
50 TO 99 
26 TO 49 

4 TO 25 



BASED ON GEORGE C. OLCOTT BLUE BOOKS OF 
LAND VALUE. 1920 TO 1930 



PREPARED BY HOMER HOYT 




FIG. 42 



MAP OF CHICAGO 

-SHOWING- 
LAND VALUES -1928 

AVERAGE VALUES FOR 960 ACRE TRACTS IN DOLLARS PER ACRE 
SOURCE: GEORGE COLCOTT'S LAND VALUES BLUE BOOK OF CHICAGOH929 




STHCCT 

i tracer 



i I 5 



FIG. 43 



A NEW ERA THAT FOLLOWED A WORLD WAR 



261 



by no means equally distributed by regions or types of property, as 
Table XXI shows. 

As Figure 45 shows, the increase in land values was greatest in two 
semicircular belts, north and south, that traced arcs around the old 
blighted area where population declined between 1920 and 1930 and 

TABLE XXI 

VALUE OF LAND BY PRINCIPAL AREAS AND TYPES OF USE IN 

CHICAGO, 1910 AND 1928, COMPARED WITH POPULATION 

GROWTH, 1910 AND 1930 





LAND VALUE 
(MILLIONS or DOLLARS) 


POPULATION 
(THOUSANDS) 


IQIO 


1928 


1910 


1930 


Area: 
The Loop 


$600 
400 
500 


$1,000 

1,000 
3,000 






Area bounded by Belmont, 
Kedzie, Pershing, outside 
the Loop 


731 
967 


2 


720 
,656 


Area in 1933 city limits north 
of Belmont, west of Kedzie, 
and south of Pershing Road 

Type of use: 
Residential 


By Uses 


Percentage Increase 


$500 
200 
200 
600 


$2,267 
400 

1,333 
1,000 


353 

IOO 

566 
67 


Industrial 
Outlying business 


Central business 


Residential 


Average 15 Districts in Outlying Areas 


$37 
29 


$ 316 
390 


760 
1,247 


Outlying business 





where the population that remained consisted of races or nationalities 
that were lowest in the economic and social scale. It was in this area 
that was largely settled between 1899 and 1926, as Figure 44 shows, 
that the largest increases in land values occurred. The extension of 
transportation facilities into these areas; as Figure 46 indicates, had 
likewise facilitated the process of settlement and the rise in land values. 



MAP OF CHICAGO 

-SHOWING- 



EXTENT OF SETTLED AREA 
IN 1926 



LEGEND 

AREAS SETTLED BETORE 1699 

GROWTH OF SETTLED AREA FROM 1899-1926 



NOTE : BASE MAP SHOWS PRESENT CtTY STRUCTURE 



PREPARED BY HOMES 




FIG. 44 



MAP OF CHICAGO 



INCREASE IN LAND VALUES 
1918 TO 1928 



PERCENTAGE OF INCREASE 
LESS THAN 100 PER CENT 
100 TO 299 PERCENT 
300 PER CENT AND OVER 




! I I 



FIG. 45 



MAP OF CHICAGO 

- SHOWING - 



EXTENSIONS TO 

SURFACE AND ELEVATED LINES 

1903 TO 1932 



LEGEND 

ELEVATED UNES 

SURFACE LINES BUILT FROM 1903 TO 1918 

SURFACE LINES BUILT FROM 1919 TO 1933 

TROLLEY BUS LINES 

NILES CENTER EXTENSION.I925 




FIG. 46 



A NEW ERA THAT FOLLOWED A WORLD WAR 265 

THE PERIOD FROM 1929 TO 1933 

Dulness sets in. The Chicago real estate market had begun to grow 
dull as early as 1927. A decline in the volume of transfers, of new build- 
ings, and of lots subdivided had indicated that the feverish activity of 
1925 and 1926 was subsiding, while a slight increase in the number of 
foreclosures was a barometer of approaching financial storms. The 
underlying reason for this slackening of the pace of speculation had been 
the falling-off in the rate of population growth in the Chicago area 
after ig2f 39 while the supply of residential accommodations was being 
greatly increased. As a result, apartment rents ceased to advance, 
while operating costs commenced to creep upward. The demand of 
builders for vacant lots began to abate, and the buyers of subdivision 
lots had already discovered that they could rarely resell their holdings 
at a profit. 

While the land market was thus losing its buoyancy, in 1927 and 
1928, there were no recessions in values. In fact, asking prices of prop- 
erties continued to advance slowly. Cash transactions were becoming 
less frequent, however, and the illusion of a rising market was sustained 
by trades of one type of property for another, in which the price was 
padded by both parties. 140 The high level of values was also supported 
by first-and second-mortgage loans, so that owners could borrow up to 
80 per cent of the peak value of their property, even when they could 
not sell their entire equity. The market for real estate "gold" bonds 
was still so good that huge Loop office buildings and large apartment 
hotels could be financed on the proverbial shoestring. In many cases it 
was possible for a promoter to borrow enough money on a bond issue to 
buy a lot, erect a twelve-story building, and pay himself a cash profit 
besides. Some operators negotiated leases of Loop corners at high fig- 
ures, put out a bond issue on the security of the leasehold, and then 
proceeded to erect a skyscraper, to which they held title, without having 
made any substantial investment. 

The stock-market boom and crash. Notwithstanding these efforts to 
prop up real estate values from 1927 to 1929, the speculative public was 
forsaking real estate for the stock market. Land purchases no longer 

139 See the computations of the writer based on the school enrolment. 

J 4 The prevailing practices of this time are illustrated by the story of the lady who had 
a dog, which she insisted was worth $10,000. One day she triumphantly announced to a 
friend that she had sold the dog for $10,000. "Did you get cash?" inquired the friend in- 
credulously. "No, not exactly," said the lady, "but I got two $5,000 cats for him." 



266 ONE HUNDRED YEARS OF LAND VALUES 

yielded quick cash profits, and real estate ceased to lure the crowds of 
new buyers who were being attracted by the fortunes that were being 
made in securities. Consequently, many real estate operators viewed 
the stock-market crash of October 24, 1929, with ill-concealed satisfac- 
tion. The public would be taught not to dabble in margin accounts, 
they thought, and would return to land-buying as the safest form of in- 
vestment. 

It was soon discovered, however, that the financial collapse was not 
confined to the stock market, and that the readjustment of values could 
not fail to affect the entire American economic structure. The decline in 
real estate activity continued in 1929 and 1930. The number of transfers 
in Cook County declined from 102,239 in 1927 to 67,770 in I930. 141 The 
value of new construction in Chicago, as shown by permits, fell off even 
more drastically from $315,800,000 in 1928 to $79,613,400 in i93o. I4a 
Subdivision activity came to a complete standstill. The number of fore- 
closures in Cook County increased from 3,148 in 1928 to 5,818 in i93o, 143 
and the second-mortgage holders, who had been the first to foreclose, 
were now themselves being forced out by the holders of the underlying 
liens. Loans on new mortgages and trust deeds dropped from over 
$1,000,000,000 in 1928 to $425,000,000 in I930. 144 

Up to 1930, however, there had been only a moderate recession in 
rents, in wages, and in employment. The majority of real estate owners 
were grimly hanging on, hoping for a revival that would restore the 
prosperous days of 1926. 

The sharp decline of real estate values in ipji. In 1931 came the col- 
lapse of the peak values of 1928. Chicago real estate received a series 
of shocks which forced reluctant owners to admit that a drastic decline 
had occurred. Sharp reductions in employment and in wage rates, as 
wages paid by American manufacturing industries dropped from $11,- 
500,000,000 in 1929 to $7,000,000,000 in 1931, forced store and apart- 
ment rents downward. 

As Tables XXII and XXIII show, the decline in employment and 
payrolls in Chicago manufacturing industries beginning in Novem- 

141 Reports of the Recorder of Deeds of Cook County. 

143 Reports of the Building Department of the City of Chicago. 
J 43 Computed by the Chicago Title and Trust Co. 

144 Annual reviews of the Economist. 



MAP OF CHICAGO 



RESIDENTIAL LAND VALUES PER FRONT FOOT 

1931 



FRONT FOOT VALUES IN DOLLARS 

\mM\ 100 AND OVER 
ElXtt-g 50 TO 99 
EM 26 TO 49 
4 TO 25 



H ASSESSMENT OF LAND IN 
NTY BY J.L.JACOBS 



EPARED BY HOMER HOYT 




FIG. 47 



268 



ONE HUNDRED YEARS OF LAND VALUES 



ber, 1929, continued steadily almost without any upturn until March, 

I933- 145 

In June, 1931, began the debacle of the outlying banks, loaded with 
non-liquid real estate, as thirty banks, including the Bain chain, closed 

TABLE XXII* 

DECLINE IN PAY-ROLLS IN CHICAGO MANUFACTURING INDUSTRIES 

BY MONTHS FROM OCTOBER, 1929, TO MAY, 1933 

(Monthly Average, 1925-27=100) 

1929 October 103 . 9 1931 October 46 . 8 

November 99 . 4 November 42.4 

December 94 . 5 December 44 . 3 

1930 January 89 . 5 1932 January 42 . 8 

February 41.6 

March 39.8 

April 36 . 9 

May 34.9 

June 33-5 

July 28.9 

August 31.0 

September 31.8 

October 32.1 

November 29.7 

December 29 . i 

i93i January 59.6 1933 January 28.4 



March 


y m o 
88.4 


April 


87.4 


May 


84.0 


June 


80.7 


July 


73. 2 


August 


71 


September 


7O I 


October 


67 7 


November 


62 8 


December . . 


62.2 



February 61.6 

March 61 . 7 

April 60 . o 

May 58.2 

June 55-5 

July 53-6 

August 52.9 

September 49-4 



February 28.6 

March 25.7 

April 26.4 

May 29.3 

June 32.2 

July 35-2 

August 39.5 

September 39.9 



* Illinois Department of Labor, Labor Bulletin, p. 143. Releases, February ig-October 20, 1033- 

their doors. Meanwhile, the total local tax levy had increased from 
$65,000,000 in 1915 to $290,000,000 in 1930. More city taxes had been 
levied in the eight years ending in 1931 than in the entire period 

J 45 Employment in manufacturing industries for the United States as a whole declined 
slightly more than the average for all industries from 1929 to the first four months of 1933, 
the decline for manufacturing being 42.8 per cent and for all industries 40.7 per cent. 
("Employment during the Depression," National Bureau of Economic Research Bull. 47 
[June 30, 1933]). 



A NEW ERA THAT FOLLOWED A WORLD WAR 



269 



before 1923, and taxes levied for the year 1930 alone exceeded the 
total amount collected from 1830 to 1893. Most of the burden of local 
taxes fell upon real estate, and, to make matters worse, the collection 
of the 1928 taxes had to be postponed, as a result of the gross errors in 
the original assessment, from a period of prosperity to one of depression. 
Foreclosures were mounting rapidly, the number increasing from 5,818 
in 1930 to 10,075 m I 93 I an d the tota l value of the trust deeds in which 
suits were brought rising from $244,246,577 to $457,268,689. 146 Vacan- 
cies and delinquencies in collections were likewise increasing rapidly, as 
Figure 48 shows. 

TABLE XXIII* 

DECLINE IN EMPLOYMENT AND IN PAY-ROLLS IN 
CHICAGO MANUFACTURING IN- 
DUSTRIES, 1929-33 

(Figures for the Month of April of Each Year; 
Monthly Average, 1925-27= 100) 



Year 


Employment 


Pay-Rolls 


IQ27 


IOO O 


00 O 


1028. . 


Q7 . Z 


88.9 


1929 

IQ2O 


97.8 
OO Q 


100.5 
86 o 


IQ^I 


74 3 


ro g 


IQ32 


<?6 i? 


2 Q 


IQ-2-? 


40 3 


26 4 









* Illinois Department of Labor, Labor Bulletin, XII, No. 7 (Janu- 
ary, 1933), 143- Release, May 18, 1933. 

The forces of depression dealt even harder blows to Chicago real 
estate in 1932 than they had in 1931. The continued decline in wages 
and employment until 170,000 families in Chicago were supported by 
charity, and the inability of the local governments to pay their em- 
ployees, reduced the public buying power. By December, 1932, pay- 
rolls in Chicago manufacturing industries had declined to 29 per cent of 
the level of November, 1929. Store and apartment rents continued to 
decline throughout the year, and there was an increase in vacancies and 
in delinquencies in collections. It is estimated that 40,000 families 
"doubled up" or occupied apartments jointly and many thousands left 
the city. The population of Chicago certainly failed to gain, and it 
probably received a setback. As gross rents of all types of properties 

146 Computed by Quinlan & Tyson, a prominent real estate firm. 



270 



ONE HUNDRED YEARS OF LAND VALUES 



were falling faster than operating expenses, the net incomes of land- 
lords was reduced almost to the vanishing-point, particularly in the 
case of kitchenette apartments requiring heavy maintenance costs. 
Meanwhile, the shock of outlying bank failures continued until March, 
1933, when a total of 163 banks, whose locations are indicated on Figure 
49, had been closed in Chicago. This had a particularly depressing 
effect on outlying real estate, where the gains in land values had been 



FACTORS IN THE CHICAGO REAL ESTATE DEPRESSION 
1926 TO 1933 



^PERCENTAGE 'OF DELINQUENCIES 
IN COLLECTIONS ON SOUTH SIDE 




2,500 



FIG. 48 

greatest, because it meant the destruction of the local institutions that 
had hitherto made loans upon neighborhood real estate and that had 
financed local merchants. In communities where all the banks had 
failed, the loss of confidence and the decline in land values were particu- 
larly severe. Meanwhile, foreclosures reached a new peak in 1932, ris- 
ing from 10,075 to 15,201 in number and from $457,268,689 to $574,- 
589,646 in amount. 147 Trust deeds to the amount of $2,000,000,000 had 
been involved in foreclosure suits by the end of 1932, and if allowance 
be made for deeds that were given by equity holders to avoid fore- 

x *7 The number of foreclosures was computed by the Chicago Title and Trust Co., the 
amount of trust deeds foreclosed upon by Quinlan & Tyson. 



MAP OF CHICAGO 

-SHOWING- 

THE DECLINE IN THE NUMBER 

OF CHICAGO BANKS OUTSIDE THE LOOP 

1929 TO 1933 



LEGEND 

"* O BANKS IN OPERATION ON JULY 1,1933 

LOCATIONS OF BANKS THAT WERE 
OPERATING ON JULY 1,1929 AND WERE 
CLOSED OR IN PROCESS OF LIQUIDATION 
ON JULY 1, 1933 




FIG. 49 



272 ONE HUNDRED YEARS OF LAND VALUES 

closure, it is probable that half of the property in Cook County will pass 
into the hands of mortgage holders before the end of the depression. 

At the beginning of the bank moratorium in March, 1933, Chicago 
real estate was at the lowest ebb it had been since the beginning of the 
downward trend. At that time average apartment rents had declined 
fully 50 per cent since I928. 148 The reduction in store rents had varied 
from 40 to 90 per cent, depending upon the location. After a period of 
several years in which there had been few cash sales, a number of trans- 
actions were being made. A study of 127 sales and listings for small 
homes and apartments in all parts of Chicago indicated that the de- 
cline in the value of improved properties from 1928 to 1933 was 50 
per cent. 149 There was no demand for vacant lots even in built-up areas 
at any price, although such parcels were offered for sale at from 75 to 
90 per cent below 1928 prices. Large apartment buildings could have 
been bought at less than half of their original first mortgages, but there 
were practically no buyers. Properties were being acquired by buying 
individual bonds at discounts ranging from 50 to 90 per cent, but the 
evils of receiverships and the burden of unpaid taxes deterred pur- 
chasers. It was almost impossible to borrow money on new trust deeds, 
and where loans were made, they sometimes did not exceed 10 per cent 
of the amount loaned on the same property in 1928. 

A SURVEY AT THE BOTTOM, MARCH, 1933 

The improvement in business following the bank moratorium in 
March, 1933, may mark the beginning of the end of the worst phase of 
the Chicago real estate depression. In the early part of 1933, however, 
Chicago land values had reached the lowest level in their recent decline 
and accordingly the maximum extent of the drop from 1928 is indicated 
by drawing a line from the peak to this point. 

The full assessed value of all the land in Chicago for the year 1931 
was $2,500,000,000. This assessment was actually made in 1932 and re- 
flected the lower level of values prevailing at that time. Compared with 
twenty-five hundred independent appraisals, this assessment seemed to 
be equivalent to the full market value of the land at the time it was 

^ This is based on the average reduction reported by leading brokers in all sections of 
Chicago in an unpublished report to the county assessor, J. L. Jacobs. 

J 49 A study made for the county assessor, J. L. Jacobs. 



A NEW ERA THAT FOLLOWED A WORLD WAR 273 

made. 150 Hence the decline in Chicago land values from the $5,000,- 
000,000 level of 1928 to the $2,500,000,000 level for the early part of 
1932 was 50 per cent. From the spring of 1932 to the spring of 1933 it 
is estimated that a further decline of 20 per cent has occurred, so that 
the value of Chicago land at the beginning of 1933 was $2,000,000,000. 

The reduction in land values was by no means uniform. It was 
greatest in the case of business property and in high-grade apartment 
property in which there had been the greatest advances, and least in the 
case of cheap residential land. It was recognized that far more land 
was zoned for business and tall apartment buildings than could be used 
in the near future, and that land values that reflected conversion to such 
uses could not be justified. The greatest reductions in the 1931 assess- 
ment as compared with the 1928 assessment were made in these classes 
of land, and it is believed that this represented the true market situa- 
tion. Table XXIV, therefore, indicates the extent of the relative de- 
cline in different types of land, although the full extent of the decline 
would have been even greater, as the 1928 assessed values were about 
25 per cent below the sales prices of that time. 151 

In business properties, however, the decline varied greatly between 
different locations. There was a contraction of the profitable business 
area in each outlying center, and the best locations in the center of a 
district maintained themselves far better than sites on the fringes. 
Thus rents at the southwest corner of Sixty-third and Halsted Street 
declined only 40 per cent from 1928 to 1933, while the reduction in rents 
on Halsted Street north of Sixty-first Street or South of Sixty-fifth 
Street ranged from 80 to 90 per cent. 152 Similarly, on the west side of 
Commercial Street, from Ninety-first to Ninety-second Street, the 
string of chain stores held the throngs and maintained values, but there 
was a collapse of rents on the opposite side of the street and on Ninety- 
second Street. In the Loop, also, there was a retreat from the outer 
fringes to the center. The Stevens Hotel was too far south to be profit- 
able while the Civic Opera Building was too far west. The Wacker 

*& Of these 2,500 appraisals, approximately one-half were made by the Chicago Title 
and Trust Co. and one-half by Harry Cutmore & Associates. The appraisals were made in 
the latter part of 1931 and early part of 1932. 

* As indicated by the study of Herbert D. Simpson, Tax Racket and Tax Reform in 
Chicago, and by the analysis of 127 properties made by the writer. 

152 Based on local survey of rents by writer. 



274 



ONE HUNDRED YEARS OF LAND VALUES 



Drive development was regarded as premature and North Michigan 
Avenue as overboomed. The wholesale district west of Wells Street was 
adversely affected by the depression and by the completion of the Mer- 

TABLE XXIV* 

AVERAGE REDUCTION IN FULL VALUE OF LAND FOR ASSESSMENT PUR- 
POSES FOR 1931 AS COMPARED WITH 1928 FULL VALUE ACCORD- 
ING TO THE RELATIVE VALUE OF THE LAND 
(Taking Average Values for Entire Maps) 



Range in Value 1928 Assessment 


No. Maps 


Per Cent, 
1931 as Com- 
pared with 
1928 


Per Cent 
Reduction 


$4 $25 front foot 


Residential Land 


23 
32 
40 

3i 
4 


85 
82 

75 
62 

59 


15 
18 

25 
38 
41 


$25 01 $50 front foot 


$5o.oi-$ioo front foot 
$100.01 $500 front foot 


$500 and up 


Average all residential 




74-7 


25-3 


Under $50 front foot 




Business Land 


6 

22 
22 
6l 
12 

I 
I 


58 
63 
63-5 
60 

55 
70 
60 


42 
37 
36.5 
40 

45 
30 
40 


$5o.oi-$ioo front foot 
$ioo.oi-$2oo front foot 
$2oo.oi-$5oo front foot 
$500.01-$!, 200 front foot 
Loop retail area 


Loop wholesale area 

Average all business outside 
Loop 




60.6 
63 
69 


39-4 
37-5 
3i 


Average including Loop 




Average all types of Land . . 







* Unpublished study made by the writer for the county assessor, J. L. Jacobs, based on 
the comparison of 1928 and 1931 front-foot values for the entire city. The typical unit, or 
"map" is an area i mile wide and i miles long, containing 960 acres with streets and alleys. 
Some maps contain a smaller area than this. The maps correspond exactly to the pages in 
George C. Olcott's Land Values Blue Books of Chicago as well as to pages in the land-value maps 
in the assessor's office. 

chandise Mart, which drew away some of its best tenants. So land 
values on the outer edges of the Loop declined from 40 to 50 per cent, 
while the center of it dropped only 25 to 30 per cent. 

Outlying business centers were affected in some cases not only by 



A NEW ERA THAT FOLLOWED A WORLD WAR 275 

the depression but by the growth of rival centers. The establishment of 
branches of Loop department stores at Lake and Marion streets in Oak 
Park and at Davis and Orrington streets in Evanston tapped the trade 
of adjacent Chicago areas. The Madison-Crawford and Madison- 
Kedzie districts were unfavorably affected on the west and the Wilson 
Avenue and Howard Avenue districts on the north. Instead of attract- 
ing trade from the suburbs, the suburbs in their new satellite loops at- 
tracted trade away from the outer edges of Chicago. The cancellation 
of chain-store leases by bankrupt concerns, the failure of banks that 
had supported local merchants, the great reduction in public buying 
power as a result of unemployment, and chain-store competition that 
bore severely upon the independent merchant all combined to de- 
moralize the rents of commercial property. A great many vacant stores 
were to be seen on leading business streets, and there was a widespread 
delinquency in rent collections. Landlords were satisfied to accept in 
many cases whatever rent the tenant offered, regardless of the amount 
stipulated in the lease, for it was considered better to have the store 
occupied at a nominal rent rather than to have it empty. 

The depression was by no means confined to store property. Home- 
owners had been prevailed upon to assume heavy mortgages, and when 
these came due, many, notwithstanding heavy sacrifices, could not pay 
any part of the principal. Thousands of small home-owners lost their 
properties after having invested their life-savings to acquire a shelter. 
By March, 1933, the depression had driven down the value of bunga- 
lows until there was in most cases no equity left above the mortgage. 

The decline of values went even farther in the case of large properties. 
Not only was the equity of the owner and the lien of the second mort- 
gage successively made valueless, but finally the interest of the scat- 
tered bondholders, racked by receivers and burdened with tax charges 
and foreclosure fees, was reduced in value to one-third or one-half of 
the original obligation. 

After the bank moratorium in March, 1933, there was a rapid rise in 
the price of wheat, corn, and securities in the United States, and a 
marked improvement in general business conditions. While the influ- 
ence of inflation had been but faintly reflected in real estate values if at 
all by the summer of 1933, there was a decline in vacancy rates for 
apartment buildings in many sections of the city, which is usually the 
first step in the recovery. 



276 ONE HUNDRED YEARS OF LAND VALUES 

The year 1933: a turning point. The year 1933 may not only mark 
the turning-point of one cycle in real estate; it may be the year of 
transition from a century-old American policy of almost uncontrolled 
individualism to one of planned economy. Whatever may be the course 
of the future events that are hidden from the eyes of the present writer, 
the history of Chicago land values from 1830 to 1933 must be regarded 
as an example of the doctrine of laissez faire applied to American condi- 
tions. Here was exhibited an energy that at times reached an unusual 
pitch of intensity, and which produced in a century a city covering six 
times the ground area of Paris and rising in towers and pinnacles nearly 
as high as the Eiffel Tower. Here there was a mingling of races and a 
mobility of the population with but few parallels in the history of the 
world. Its growth, however, was accomplished at great social cost. Its 
exuberant periods of building, subdividing, and land speculation were 
followed by the inevitable aftermath of foreclosures, bankruptcies, bank 
failures, and losses of savings that affected not only the speculators but 
the entire community. Cheaply constructed and poorly planned build- 
ings, a helter-skelter development of dwellings and industries, and sub- 
divided tracts with sidewalks overgrown with weeds were the products 
of this unbridled individualism. Great public works were indeed under- 
taken and plans for the improvement of the city formulated which bore 
fruit in such magnificent achievements as the Michigan Avenue and 
Wacker Drive developments and the construction of the Outer Drive 
on land pumped out of the lake, but most of the Chicago lots were sub- 
divided and the Chicago buildings erected solely under the guidance of 
a speculative profit motive. In this method of its growth, Chicago was 
not unique. Such were the characteristic traits of American develop- 
ment during the period of rapid expansion in the past century. 



PART II 

ANALYSIS OF THE RELATION OF THE GROWTH 

OF CHICAGO TO THE RISE OF ITS 

LAND VALUES, 1830-1933 



CHAPTER VI 

THE RELATION BETWEEN THE GROWTH OF CHICAGO 
AND THE RISE OF ITS LAND VALUES 

In the first part of this work, the factors affecting Chicago land values 
were presented in their historical setting, and the emphasis was placed 
upon the current background and the qualitative differences between 
the five major periods in Chicago's real estate history. In this part, the 
broad sweep of these forces through the century will be reviewed, and 
their behavior as revealed by statistical records analyzed. From this 
point on, the quantitative measurement of the various factors will be 
stressed. 

A. THE DEMAND FOR CHICAGO LAND 

i. The swarm of people. One of the chief requisites for the growth 
in the volume of buildings in any urban community is an increase in 
the number of people dwelling on or near the site. As the growth in the 
number of persons living in a city thus has a direct bearing upon the in- 
crease in land values, the increase in the population of Chicago is of 
fundamental importance in this study. 

The growth of Chicago in the nineteenth century has been paralleled 
by that of no other great city of a million population or over in either 
ancient or modern times. 1 In the one hundred years that represent the 
life-span of Chicago, its population increased from 50 to 3,376,438. It 
compressed within a single century the population growth of Paris for 
twenty centuries. From 1840 to 1890, the rapidity of its development 
outstripped that of every other city in the world. An insignificant town 
in 1840, Chicago forged ahead of its older rivals in the Middle West be- 
fore 1880, as Table XXV shows, and by 1890 it was the second city in 
point of numbers in the United States. In 1930 only London, New York 
and Berlin all much older contained more people. Nevertheless, the 
relative growth of the population of Chicago since 1900 has not been 
materially greater than that of a number of other American cities, and 

1 Maurice Halbwachs, "Chicago, experience ethnique," Annales d'histoire economique et 
sociale, IV (January 31, 1932), 10-11. 

279 



280 



ONE HUNDRED YEARS OF LAND VALUES 



it has been far surpassed by that of Detroit and Los Angeles. 2 The 
growth of some of the suburbs of Chicago in the twentieth century, 
however, has been comparable to that of even those two rapidly grow- 
ing cities. 3 

a) The growth of Chicago compared with that of other American cities. 
The population growth of Chicago may be compared first with that of 
its older rivals in the Middle West St. Louis, Cincinnati, and New 
Orleans that were mainly supported by the commerce of the Missis- 
sippi River and its branches. Table XXV shows how rapidly Chicago 
outstripped these competing cities after the railroads entering Chicago 

TABLE XXV 

POPULATION OF CHICAGO AND OTHER LEADING CITIES 
IN THE MIDDLE WEST, 1840-1930 









RIVER 


CITIES 




LAKE ( 


CITIES 


YEAR 


Chicago 


New 
Orleans 


St. Louis 


Cincin- 
nati 


Pittsburgh 


Cleve- 
land 


Detroit 


1840 
i8<o . 


4,479 
20,063 


102,193 
116, 375 


16,469 
77,86o 


46,338 
II 5,435 


31,201 
67,863 


6,071 
17,034 


9,102 
21,019 


1860 . . . 


100 , 206 


168,67^ 


160,780 


161 ,044 


77 ,023 


43,417 


45,619 


1870 
1880 
1800. . . 


298,977 
503,298 

I ,008, 570 


191,418 
216,090 
242,039 


310,864 
350,518 
451 , 770 


216,239 

255,139 
296,908 


139,256 
235,071 

343 , 904 


92,829 
160,146 
261,353 


79,577 
116,340 
205,876 


IQOO. . . 


1,698,575 


287,104 


575,238 


325,902 


451,512 


381,768 


285,704 


IQIO 


2 i8t; 283 


72Q O7< 


68? O2Q 


363 , tJQI 


^33,00^ 


560,663 


465 , 706 


IQ20 
IQ3O 


2,701,705 

3 , 776,4^8 


387,219 

4^8, 762 


772,897 
821 ,060 


401,247 
4 5 1 , 1 60 


588,343 
660,817 


796,841 
000,429 


993,678 
1,568,662 



















diverted traffic from the river ports. The same table also shows the 
more rapid growth of the lake cities, such as Detroit and Cleveland, as 
compared with the river towns. Again the increase in the population of 
Chicago may be contrasted with that of the cities on the Atlantic sea- 
board and the Pacific Coast. Chicago, as Tables XXVI and XXVII 
indicate, is seen to grow at a much more rapid rate than the eastern 
cities, as the tide of population shifted westward, but as Tables XXVI 
and XXVII show also, its population gain since 1900 has been far less 
than that of Los Angeles on the Pacific Coast and Detroit on the Great 
Lakes. The growth of Chicago has not been at the expense of all of its 
rivals, for the direct water and rail connections between New York and 
* See Table XXVIII, 3 See Table XXIX. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



281 



Chicago have been a primary factor in the rise of New York City in its 
struggle with Boston and Philadelphia. 

b) Where did the people come from? Where did all these people come 
from and how were they brought to a spot which a century ago was a 

TABLE XXVI 
POPULATION OF CHICAGO AND SEABOARD CITIES, 1840-1930 



YEAH 


CHICAGO 


ATLANTIC SEABOAED 


PACIFIC COAST 


New 
York* 


Phila- 
delphia 


Boston 


Balti- 
more 


San 
Fran- 
cisco 


Los 

Angeles 


Seattle 


1840 
1850 
1860 


4,479 
29,963 
109 , 206 
298,977 
503,298 
1,098,570 

1,698,575 
2,185,283 
2,701,705 
3,376,438 


39I,H4 
696,115 
1,174,799 
1,478,103 
1,911,698 

2,507,414 
3,437,202 
4,766,883 
5,620,048 
6,930,446 


t 

565,529 
674,022 
847,170 
1,046,964 

1,293,697 
i , 549 , 008 
1,823,779 
1,950,961 


93,383 
136,881 
177,840 
250,526 
362,839 

448,477 
560,892 

670,585 
748,060 
781,188 


102,313 
169,054 
212,418 
267,354 
332,313 
434,439 
508,957 
558,485 
733,826 
804,878 










1 ,6lO 




56,802 
149,473 
233,959 
298,997 
342,782 
416,912 
506,676 
634,394 


4,385 
5,728 
11,183 

50,395 
102,479 
319,198 
576,673 
1,238,048 




1870 
1880 


1,107 

3,533 
42,837 
80,671 
237,194 

315, 3!2 

365,583 


1890 

IQOO . 


IQIO. . 


IQ2O 


IQ7O 





* Corporate limits of 1930. 

f Population of 1840 did not include a large area annexed prior to 1850. 



TABLE XXVII 

RELATIVE INCREASE IN POPULATION OF ELEVEN LEADING 
AMERICAN CITIES, 1850-1930 
(1850=100) 



Year 


Chi- 
cago* 


New 

Yorkt 


Detroit 


Los 

Angeles 


Cleve- 
land 


St. 
Louis 


Balti- 
more 


Boston 


Pitts- 
burgh 


Cin- 
cinnati 


New 
Orleans 


1850 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


1860 
1870 
1880 


356 

Q3Q 

1, 680 


169 
216 
276 


214 
390 
554 


270 
358 
700 


254 
546 
941 


206 
400 

449 


126 
158 
199 


130 
180 
266 


"5 
205 

345 


140 
191 

222 


!45 
165 
186 


1800 


j ,370 


360 


980 


3 130 


1 ,537 


579 


257 


327 




259 


209 


I9OO 


5,158 


492 


1,360 


6,362 


2,246 


737 


300 


410 


664 


282 


247 


IQIO 


6,640 
8 188 


671 
800 


2,217 
4,540 


20,000 
35,818 


3,300 
4,700 


881 
990 


330 
433 


490 
546 


789 
716 


316 

35 


293 
333 


IQ3O 


10,231 


993 


7,470 


76,900 


5,300 


1,054 


476 


570 


985 


392 


37 



























* Population within 1933 corporate limits. 
t Population within 1930 corporate limits. 



dismal swamp far removed from the path of settlement? The natural 
rate of increase of the population could not account for so prodigious a 
rate of growth in the earlier period. An analysis of the sources of the sup- 



282 



ONE HUNDRED YEARS OF LAND VALUES 



ply of population of Chicago shows that the extraordinary rate of gain in 
the number of persons residing within its limits was the combined result 
of three main factors : immigration from Europe, migration from other 

TABLE XXVIII 

RELATIVE INCREASE IN POPULATION OF THIRTEEN LEADING 

AMERICAN CITIES, 1900-1930 

(1900=100) 



Year 


Chi- 
cago 


New 

York 


Phila- 
del- 
phia 


De- 
troit 


Los 
Ange- 
les 


Cleve- 
land 


St. 
Louis 


Balti- 
more 


Bos- 
ton 


Pitts- 
burgh 


San 
Fran- 
cisco 


Cin- 
cin- 
nati 


New 
Or- 
leans 


1900 . ... 


too 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IQIO 
I92O 
1030 


129 
159 

198 


139 
164 
203 


120 
140 
ISI 


163 
349 
550 


3" 
562 
1,208 


147 

2IO 

233 


119 

133 
143 


no 
144 
158 


119 
133 
139 


118 
130 
148 


122 
I 4 8 
185 


in 
123 
139 


n8 
I3S 
1 60 



TABLE XXIX 

POPULATION OF SOME CITIES IN THE CHICAGO 

SUBURBAN AREA AND POPULATION OF THE CHICAGO 

SUBURBAN AREA, 1900-1930 



City or Town 


1900 


1910 


1920 


1930 


Cicero . . 


16,310 
19,259 
2,806 
3,969 
4,532 
i,34o 
2,300 
1,833 


14,557 
24,978 
4,209 
5,282 
8,033 
2,009 

4,943 
3,168 
16,802 
19,098 
393,214 


44,995 
37,234 
6,167 

6,525 
12,072 

3,383 
7,8i4 
6,694 
55,378 
35,967 
630,594 


66,602 
63,338 
12,203 
10,102 
25,829 
10,417 
15,233 

12, 166 
100,426 

54,784 
1,065,310 


Evanston. . . . . 


Highland Park . . 


LaGrange 


May wood 


Park Ridge 


Wilmette 


Winnetka 


Gary 


East Chicago . . 


3,4n 
242,652 


Suburban area* 
Cicero 


Relative Number 1900=100 


IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 
IOO 


89 
130 
150 

133 

177 

150 
215 
173 
560 
162 


276 
193 

220 
164 
266 
252 
340 
365 
1,054 
260 


408 
329 
435 
255 
560 

777 
662 
664 
i, 606 
439 


Evanston 


Highland Park 


LaGrange 


Maywood 


Park Ridge 


Wilmette 


Winnetka 


East Chicago 


Suburban area* 





* Cook County outside of Chicago, Lake, and DuPage counties, Illinois, and Lake County, 
Indiana. 



GROWTH OF CHICAGO AND ITS LAND VALUES 283 

parts of the United States, and the excess of Chicago births over deaths. 
Only a succession of improved transportation devices, combined with 
the stimulation of the flow of migration, settled so many people upon 
this prairie site in so short a time. Lake steamers and prairie schooners 
brought the advance guard of the thirties and forties, but combined 
ocean steamers and the newly completed railroads poured in the great 
stream of Irish and German immigrants of the fifties, sixties, and seven- 
ties, and the same agencies of transportation opened up the floodgates of 
southern European immigration beginning in the eighties. 

When the European sources of supply of adult man power began to 
fail altogether after the outbreak of the World War and the subsequent 
passage by the United States of drastically restrictive immigration laws, 
the shortage was made good by a migration of negroes from the rural 
South, immigration from Mexico, and an increased flow of white fam- 
ilies into Chicago from other parts of the United States. In the mean- 
time, the growth of the resident population from migration had pro- 
vided an increasing parent-stock to provide for a substantial gain by 
natural increase and the decline in the city birth-rate from 27 to 17 per 
thousand population was partly offset by a decline in the death-rate 
from 15 to ii per thousand for the period from 1898 to 1931 so that a 
substantial part of the city's growth came from the excess of births over 
deaths within the city. Tables XXX and XXXI show the relative 
amount contributed by each factor to the city's growth in population. 

c) Why did they come? Such being the sources of the Chicago popu- 
lation, why did the people come to that particular spot? The oppor- 
tunity to earn a living in trade, manufactures, banking, transportation, 
and professional and personal service was of course the reason. The 
advantage of the site of Chicago as a meeting place first of lake, river, 
canal, and wagon transportation, and then of lake and rail carriers in 
turn, made it the principal distributing and manufacturing center for a 
valley containing the richest combination of agricultural and mineral 
resources of the world that was being exploited for the first time. High- 
er wages could be paid at such a strategic site than at other less favored 
places, and the concerns located there could still undersell their com- 
petitors by virtue of lower shipping charges. Packing plants, agricul- 
tural implement works, stove factories, steel mills, electrical generating 
plants, gigantic mail-order houses, railroad shops, clothing shops, 
wholesale houses, banking institutions, and interval transportation 



28 4 



ONE HUNDRED YEARS OF LAND VALUES 



lines these were some of the magnets that pulled this great population 
to Chicago. In addition to these industries there were the retail stores, 
the theaters, the local building trades, the schools, and the local govern- 
mental agencies that supplied the needs of the resident population. The 

TABLE XXX* 
SOURCES OF INCREASE OF CHICAGO POPULATION, 1830-1930 











Increase in 






Total 


Increase in 


Increase in 


White Popu- 


Increase in 


Decade 


Increase in 


Foreign-born 


Colored 


lation from 


Births over 




Population 


Population 


Population 


Other Parts 


Deaths 










of U.S. 




183040 


4,4.20 


f 


f 




4OO 


184050 


2 < , 484 








2,OOO 


185060 


70, 243 


j. 


j. 




IO,OOO 


1860-70 


188,717 


QO , I 3 3 




63,000 


3O,OOO 


1870-80 


205 108 


60 302 




QC OOO 


CQ OOO 


1880-90 


4.06 66<? 


24.4. 760 


7 7OI 


14.4. 1 06 


IOO OOO 


1890-1900 


588,725 


137,584 


15,879 


265,262 


170,000 


1900-1910 


468,708 


194,105 


13,953 


48,650 


212,000 


1910-20 


525,422 


24,165 


65,000 


236,257 


200,000 


IQ2O 3O. . . 


674, 733 


36, 57 1 ? 


146,000 


2CQ IC.8 


233, OOO 















* Total population increase, increase in foreign-born, and increase in colored population are from the U.S. 
Census figures. Increase in births over deaths computed from actual birth and death statistics since 1000. 
Figures for earlier periods estimated on basis of death-rates published since 1867 and estimated birth-rate. 
Increase in number of white persons coming from other parts of the United States computed by subtracting 
other factors from total population increase. The figures for increase of births over deaths assume that persons 
born in Chicago remain there for at least a decade. 

t Before 1860 no accurate date is available for increase in foreign-born population. Increase in colored 
population in this period was negligible. 



TABLE XXXI 

PERCENTAGE OF TOTAL INCREASE OF CHICAGO POPULATION COMING 
FROM EACH SOURCE, 1860-1930 



Decade 


Total Increase 
in Population 


Increase in 
Foreign-born 
Population 


Increase in 
Colored 
Population 


Increase in 
White Popula- 
tion from U.S. 


Increase in 
Births 
over Deaths 


1860-70 


IOO 


47 8 




33 4. 


ic o 


1870-80 


IOO 


2O-4 




46 3 


24 4 


1880-90 


IOO 


40 3 


I 6 


20 o 


2O I 


1890-1900 
1900-1910 
191020 


IOO 
IOO 
IOO 


23-4 
41.4 

4 6 


2.7 
3-0 

12 4. 


45-o 
10.4 

4.e o 


28.9 
24.2 
38 o 


1920-30 


IOO 


1-4 


21 7 


38 4. 


34 ^ 















magnitude of the population was but the measure of the strength of the 
economic advantages of the site of Chicago, and of the economic re- 
sources of its hinterland the Upper Mississippi Valley. 



GROWTH OF CHICAGO AND ITS LAND VALUES 285 

2. Increase in the number of the buildings. The physical body of the 
growing city was the buildings connected with transportation lines, 
sewers, pavements, and water pipes that began to spread over the 
prairie as the number of the people grew. Such structures were erected, 
of course, only because the population in its need for housing, stores, and 
workshops paid rent at least high enough to cover the operating costs, 
taxes, depreciation, and interest on the cost of construction. In fact, 
the superior sites yielded an income not merely enough to amortize the 
cost of the improvement, but they also returned a surplus income to the 
owner of the land, which formed the basis for its value. The absorption 
of vacant land in the Chicago region for building purposes therefore en- 
abled hitherto unused plots of prairie to pay ground rent to their own- 
ers. The prospect for the continued growth of the settled area gave a 
speculative value to all the nearby vacant land. Hence the rate of 
growth of new construction and the amount of vacant land required for 
the houses, stores, factories, and schools of Chicago are the measures of 
the aggregate demand for vacant land on the edge of the built-up area 
and the source of its value. Corresponding to the growth of the popula- 
tion of Chicago, therefore, is the growth of the number of its buildings. 

The hamlet with twelve log cabins in 1831 had grown to a metropolis 
with 400,000 buildings in 1928, as Table XXXII shows. 4 

The buildings in Chicago in 1933, exclusive of garages, vary in size 
from a small cottage of 400 square feet to a structure with nearly 4,000,- 
ooo square feet or 50 acres of floor space. They vary in height from low 
one-story bungalows to the Board of Trade Building in the central busi- 
ness district that rises to the height of 612 feet above the street level. 5 

4 See Putney, op. cit., for the years 1825, 1831-37, 1868, 1890; Goodspeed and Healy, 
op. cit., I, 223, for the years 1842, 1851, 1853; Chamberlin, op. cit., p. 69, for the years 
1848 and 1857. J. L. Jacobs (Journal of the Proceedings of the Board of Commissioners of 
Cook County, April, 1928, pp. 1379-80) gives the result of the tabulation of all the build- 
ings assessed in Cook County in 1928. Exclusive of sheds and garages, there was a total of 
360,250 buildings in townships wholly within Chicago and 44,329 buildings in townships 
partially within Chicago. Most of the buildings in townships partially in Chicago were in 
Chicago and there were some tax-exempt buildings. The estimate of 400,000 is made by 
the writer. 

s The height of the tallest buildings in Chicago, measured from the sidewalk level to the 
top of the highest pinnacle, is as follows: 

Board of Trade 612 Mather 519 Furniture Mart 474 

Chicago Temple 569 Carbide 500 Medinah Athletic Club 471 

Pittsfield 557 LaSalle Wacker 491 Palmolive 468 

20 N. Wacker 555 State Bank of Chicago .... 479 Steuben 465 

One N. LaSalle 530 Bankers 476 Tribune 462 

Morrison Hotel 526 Straus 475 Roanoke Tower 452 

Pure Oil 523 Willoughby 448 



286 



ONE HUNDRED YEARS OF LAND VALUES 



They differ in material and type of construction from the frame stove- 
heated houses to the brick and stone elevator apartments with steel 
frames. They vary in age from structures antedating the Chicago fire 
of 1871 to buildings a year old. For tax-assessment purposes, this con- 
glomeration of buildings is grouped into 48 major divisions with a total 
of 288 different subgroups. 6 

a) Increase in the volume of building space. Ignoring the number of 
separate structures and considering merely the cubic contents of the 

TABLE XXXII 

NUMBER OF BUILDINGS IN CHICAGO COMPARED WITH POPULATION 
AT INTERVALS FROM 1825 TO 1928 



Year 


No. of Buildings 


Population 


Buildings per 
1,000 Inhabitants 


l82;.. 


14. 






1831 


12 


IOO 


1 2O 


1832.. 


3O 


200 


I CQ 


1833 


180* 


7 r * 




18^6 


ACQ 


7 82O 


118 


1837 


*y" 

<?i6 


4I7O 


124 


1842 


I 76l 


6 ooo 


227 


1848.. . 


2 742 


20,023 


l87 


1851. . 


^,708 


7,4,000 


I 7O 


i8S3 
1857 


9,212 
19,008 


59,130 

3 , OOO 


156 

2OA 


1868 


7Q 766 


2C2 O^4 


IA2 


1860 


47 Q2O 


272 O4 3 


161 


1870 


<2 6lO 


2o8 Q77 


176 


1871 


6 1 ,000 


7 2C OOO 


186 


1890 
1928 


127,871 

400,000 


1,098,570 
3,402,296 


116 
ix8 



* Population, early part of 1833; buildings, latter part of 1833. 

entire mass of buildings, the space inclosed between walls and roofs of 
major buildings in Cook County increased from less than 200,000 cubic 
feet in 1830 to an estimated 22,000,000,000 cubic feet in 1930.7 Of ap- 
proximately 500,000 buildings erected within the present city limits of 
Chicago since 1830, nearly 400,000 are still standing. 8 The replacement 
of buildings has been small in relation to the volume of new construc- 
tion. The buildings in Cook County in the latter year had a floor area 

6 Assessor's Manual, Cook County, Illinois, 1930. 

"i Estimated from the number of buildings at each period with the average cubic content 
of each estimated from the records of the assessor's office. 

8 This figure is obtained by adding the total number of building permits issued since 
1872 to the number of buildings in existence in 1870. 



GROWTH OF CHICAGO AND ITS LAND VALUES 287 

of approximately 1,600,000,000 square feet, which would cover 57 
square miles to a height of one story. If streets and alleys are allowed 
for, this quantity of construction would solidly fill all the lots in 83 
square miles, and if the rear half of the lots were kept vacant, as is 
usually the case, it would spread over 166 square miles on a one-story 
level. On the other hand, all of this building space could be put into 
one forty-story building i| miles square or into one solid twenty-story 
building 3 miles square. Such a building, with no space allowed for 
light courts or air shafts, would of course never be built, but the exam- 
ple illustrates the possible range in ground area that might be covered 
by the existing buildings in Cook County. 

b) Factors determining the volume of building space. Neither the ag- 
gregate number of people living on an urban site nor the aggregate 
floor space in the buildings is sufficient to determine the ground area 
covered by structures. The demand for land for urban use is the ag- 
gregate demand of the population for a variety of uses such as for 
streets, parks, homesites, factory sites, stores, churches, schools, gov- 
ernmental buildings, cemeteries, and railroad rights-of-way. The 
amount of space required for the principal uses enumerated is subject 
to wide variations. Thus the amount of floor space required to house 
the population is much less when there is a large proportion of single 
men in the city who sleep in the rear of stores, or fourteen to a room, as 
they did in 1836 in Chicago. The amount of space for residential pur- 
poses contracts in periods of depression when families "double up," live 
in a single room in an apartment and share dining-room and kitchen in 
common, and it expands when these families on the return of prosperity 
take separate apartments. The amount of space required for dwellings 
is greater when people live in large rooms with high ceilings than when 
they live in one-room kitchenette apartments with disappearing beds 
and gas ranges, where the one room has the efficiency of three. Less 
space is required for a population of childless couples than for one with 
children, and smaller quarters are needed when all the children sleep in 
one room than when the custom becomes established of having a sepa- 
rate bedroom for each child. The amount of space required for stores 
and factories also varies with the concentration of the business. A 
heavy volume of trade or work spread out over a long period of time 
with day and night shifts requires less store space than a smaller vol- 
ume scattered over a wider area during a shorter time interval. The 



288 ONE HUNDRED YEARS OF LAND VALUES 

demand for space for governmental buildings increases with the com- 
plexity of governmental functions, and the need for space for ceme- 
teries increases with enlargement of the city's total population and the 
increase in the number in the older age groups; although this demand 
might cease almost entirely if the practice of cremation became com- 
mon. The space taken for parks varies in different cities, and the 
amount of ground needed for railroads depends upon the importance of 
a city as a railroad center. The area taken for streets and alleys is far 
less in urban communities where the only thoroughfares are narrow 
lanes than it is in cities where the streets are wide or have parkways in 
the center and where the blocks are short and cross-streets frequent. 

The number of persons who live within a given inclosed building 
space thus varies with the habits, customs, and standards of living of 
the people. The amount of ground occupied by a given amount of floor 
space or used in conjunction with a given building also varies greatly. 
The motto of Chicago, "Urbs in horto" ("City in a Garden"), once 
meant in the forties and fifties that nearly every family had a garden 
plot next to the house, and for that a lot 50 by 125 feet was required. 
Near the central business district, however, by 1858 frame shacks were 
crowded together and built on both the front and the rear of the lot. A 
mansion of a millionaire of the eighties, even in the city, would contain 
yard space enough to provide sites for from ten to twenty of these cot- 
tages of the poor. 9 The small cottage or bungalow today, however, rare- 
ly occupies more than one-third of a lot, while the large apartment 
building occupies from 75 to 90 per cent of the ground space on which 
it stands. Similarly, the small store usually occupies no more than the 
front half of the lot, because for most purposes, except for laundries, 
restaurants, chain department stores, banks, or theaters, the deep store 
no longer pays the cost of maintaining the rear half. The large depart- 
ment store in the Loop, however, covers the entire block, even the al- 
leys, to a height of from twelve to sixteen stories and to a depth of two 
or three basements. 

Not only does the percentage of the lot occupied by the building 
range from 20 to 100 per cent, but the number of floors superimposed on 
each lot varies from one to twenty-two before the tower setback re- 
quirement lessens the floor area of the space from the twenty- third to 

9 See Fig. 50 for an illustration of this point. 



GROWTH OF CHICAGO AND ITS LAND VALUES 289 

the forty-fourth floors. In the case of tall kitchenette apartments, all 
the factors of concentrated land use are combined. The ground area is 
fully occupied, the height is carried to twenty-two stories, and the 
apartments are of the one-room Pullman type. This makes it possible 
for as many as one hundred families to live on the ground where one 
family lived in a cottage. 

The intensity of utilization, not only of the lot but also of the block 
or of the neighborhood, also fluctuates within a considerable range. 
Thirty per cent of all the lots inside the city limits of Chicago were still 



A COMPARISON OF GROUND AREA OCCUPIED BY THE HOUSES AND YARDS 

OF RICH AND POOR FAMILIES IN CHICAGO-1886 

tSSSSS WOOD CONSTRUCTION 8ggg8 BRICK CONSTRUCTION 



EASTSIDEOFDES PLAINES STREET-POLK TO HARRISON STREETS 
ROBINSWS ATLAS. VOL.!, t>L.i 




EAST SIDE OF PRA/R/E AVENUE -18 TO 20 STREETS 

ROtlNSOH? 4TLAS. VOL /,..// 




FIG. 50 

vacant in 1928, and there was in 1933 a gradation from blocks with only 
one or two houses to those which are solidly built up. 10 

c) Classification of buildings by type of use. The percentage of the 
land area of Chicago used for the various purposes from 1850 to 1911, 
according to statistics gathered by the Bureau of statistics and the 
Chicago Municipal Reference Library, is indicated in Table XXXIII. 11 
In Table XXXIV is shown the utilization of land in Chicago in 
1923. 

d) The average height of buildings in the Chicago area. The building 
space in Cook County in 1928 was distributed over approximately the 

10 In Chicago in 1928 there were 517,086 improved lots and 223,126 vacant lots (Herbert 
D. Simpson and John E. Burton, The Valuation of Vacant Land in Suburban Areas: Chicago 
Area [Chicago: Northwestern University, 1931], p. 14). 

11 This table is reproduced from Dorau and Hinman, Urban Land Economics (New 
York: Macmillan Co., 1928), p. 146. 



2QO 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE XXXIII* 
UTILIZATION OF LAND IN CHICAGO, 1850, 1870, 1890, AND 1911 





191 


1. : 


189 





187 


o 


18 


So 


CLASS OF UTILIZATION 


Acres 


Per 
Cent 


Acres 


Per 
Cent 


Acres 


Per 
Cent 


Acres 


Per 
Cent 


Total area 


I 24 , 448 


IOO.O 


IIS, <?2O 


IOO.O 


22,463! 


IOO O 


8,966 


IOO O 


Water area 


4> 2I S 


3 -4 


3 j 2 9 


2.9 


385 


i . 7 


170 


1 .9 


Land area 


120,233 


96.6 


112,230 


97.1 


22,078 


98.3 


8,796 


98? 


Vacant land 


37,334 


30.0 


64, 142 


55-5 


9,409 


42.6 


6,338 


70.7 


Utilized land 


82 , 899 


70.0 


48,088 


44-5 


12,669 


57.4 


2,458 


29.3 


Publicly utilized 


30,968 


77.4 


23, 531 


48.9 


^,835 


46 I 


1,682 


68.4 


Streets and alleys . . . 


26,368 


31.8 


20,721 


43 .O 


4, 72? 


37 3 


1 ,630 


66.3 


Recreational lands 


4,500 


c.A 


2,77? 


5.7 


1 ,096 


8.7 


CO 


2. I 


Other Public usesj 


IOO 


O.2 


75 


O.2 


14 




2 




Privately utilized 


eri ,031 


62 6 


24, >^7 


CI I 


6,834 


1 3 Q 


776 


31 6 


Residential 


30, 138 


^6 4 


I I, 008 


22 O 


3,48l 


27 <C 


46 % 


18 o 


Manufacturing 


0,672 


II 7 


6, 146 


12.8 


I , 3^0 


IO. 5 


I2C 


c; . ir 


Steam railroads 


6,9O4 


8.4 


4, ^OI 


9-4 


I 272 


10.8 


CQ 


2 . I 


Business . .... 


3, 2<2 


3 .Q 


1 ,722 


3.6 


C2S 


4- * 


22 


I . 2 


Education and religious] |. . . . 
Cemeteries 


850 


I.O 
I 2 


375 
80 q 


0.8 

I 3 


125 


i .0 


28 
6c 


i.i 

2 7 





















* Based on statistics gathered by the Bureau of Statistics and Chicago Municipal Reference Library, 
t Area reported for 1870 was 22,823, but total of items is only 22,463, as here given. 
J Does not include utilization for public education or conduct of corporate business. 
Includes a small amount of publicly utilized land. 
1 1 Includes land utilized for public education, etc. 



TABLE XXXIV* 
UTILIZATION OF LAND IN CHICAGO IN 1923 





No. of Acres 


Per Cent of 
Total Land Area 


Total land area 


I2O,OOO 


IOO.O 


Vacant 


30,000 


2$ O 


Utilized 


90 , ooo 


7? o 


Utilized: 
Streets 


30,000 


25.0 


Residential 


3o,ooof 


25.0 


Manufacturing 
Business 


16,640 
5,568 


13-8 
4.6 


All other uses 


7, 792 


6.5 









* Chicago Zoning Commission Report (1923). 

t This figure of 30,000 acres of residential land in 1923 is not consistent 
with the figure of 30,138 acres given in Table XXXIII for the year 1911, as 
there was a large amount of vacant land absorbed for residential use be- 
tween 1911 and 1923. The two tables were either computed in a different 
manner or else the figure for 1911 is too high. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



291 



height levels shown in Table XXXVI. 12 The actual ground space oc- 
cupied by buildings in Cook County is thus 18,400 acres, or 3 per cent 

of its total land area. 

TABLE XXXV* 

NUMBER OF BUILDINGS IN COOK COUNTY 
BY PRINCIPAL TYPES, 1928 



Type of Building 



Residential: 

One-family dwellings 240, 540 

Two-family dwellings 145 , 171 

Multi-family dwellings 40, 249 

Dwellings with stores or offices 41 , 517 

Hotels 513 

Club and lodge buildings 129 

Total 468,119 

Commercial buildings: 

Stores 8,963 

Office buildings 808 

Theaters 345 

Public garages 3 ,359 

Service stations i , 608 

Hospitals 72 

Miscellaneous commercial i ,920 

Total 17,075 

Industrial and farm buildings: 

Factories and loft buildings 7 , 130 

Warehouses 286 

Farm buildings i , 280 

Total 8,696 

Grand total 493 , 890 

Private garages 260,567 

Sheds, barns, and fences 126, 768 

Miscellaneous 53 , 170 

Total 440, 505 

Grand total 934,395 



No. 



* J. L. Jacobs, Journal of the Proceedings of the Board of Commissioners 
of Cook County (April 28, 1931), P- 1380. 

12 This was computed in the following manner: The number of buildings in each of the 
48 classes of the Assessor's Manual was determined by the actual count of J. L. Jacobs al- 
ready referred to. One-, two-, and three-story buildings are separately given in this classi- 
fication. The average number of square feet in each class was determined by taking the 
measurements of a number of buildings in each class from the records of the county 
assessor's office. The total number of square feet for each class was estimated by multiply- 
ing this average for each building by the total number of buildings. 



292 



ONE HUNDRED YEARS OF LAND VALUES 



Figure 51 indicates how the Chicago buildings are distributed as to 
height. Most of the tall buildings are along the lake front, and the 
height tends to decline as one proceeds west. 

e) The intensity of land utilization in Chicago. As regards the in- 
tensity of utilization of land for its residential buildings, Chicago oc- 
cupies a middle ground between European and smaller American cities. 
On the one hand, it does not possess the tenements or the dense apart- 
ment areas of Berlin, Paris, and New York, in which the poorer families 
are crowded into a limited space. On the other hand, it is, relative to 
population, not spread out as much as the smaller American cities, 
where the majority of the people reside in single-family dwellings. One 

TABLE XXXVI 

SQUARE FEET OF BUILDING SPACE AT VARIOUS HEIGHT 
LEVELS IN COOK COUNTY, 1928 



Height 


Square Feet 


Acres 


Per Cent 


First story 


800 , ooo , ooo 


18,400 


5 


Second story 


480 , ooo , ooo 


I I , OOO 


3 


Third story 


i 80 , ooo , ooo 


4,000 


ii 


Fourth story and higher 


140,000,000 


3,400 


9 










Total 


i , 600 , ooo , ooo 


36,800 


IOO 











striking characteristic of Chicago is the two-apartment building, or the 
"two flat," in which one-third of the population dwelt in 1930. As com- 
pared with 30 per cent of the Chicago population occupying "two 
flats," in sixteen self-contained American cities with an aggregate 
population of 1,583,187, only 10.44 per cent of the population lived in 
two-family dwellings in IQ30. 13 In these smaller cities, on the other 
hand, 78.6 per cent 14 of the people occupied single-family residences as 
compared with 19.4 per cent for Chicago. 15 Finally, in the smaller 

J s Figures for smaller American cities: Harland Bartholomew, Urban Land Uses (Cam- 
bridge: Harvard University Press, 1932), pp. 38, 60. The smaller cities were Knoxville, 
Tenn.; Vancouver, B.C.; San Angelo, Tex.; Fort Worth, Tex.; Cape Girardeau, Mo.; 
Sacramento, Calif;. San Jose", Calif; Springfield, Mo.; Cedar Rapids, Iowa; Tulsa, Okla.; 
Louisville, Ky.; Peoria, 111.; Jefferson City, Mo.; San Antonio, Tex.; Troy, Ohio; and 
Binghamton, N.Y. 

*4 Ibid., pp. 28, 60. 

Chicago Association of Commerce, Survey of Business Research Bureau (January i, 
1931). This figure included 625,000 living in single-family homes, 37,5 livin g in single- 
family homes in the rear of stores, and 6,500 living in single-family homes over stores. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



293 



cities, only 7.6 per cent of the people lived in multi-family buildings 16 
compared with 48.4 per cent for Chicago. 17 The average population 
density of Chicago within areas occupied for residential uses was 100 

AIR SPACE OCCUPIED BY BUILDINGS IN CHICAGO-1933 
BB9 SPACE OCCUPIED BY BUILDINGS AT VARIOUS HEIGHT LEVELS 
K%%3 VACANT AREA AT VARIOUS HEIGHT LEVELS 
STORIES ARE COMPUTED ON THE BASIS OF THE AVERAGE HEIGHT OF 12 FEET 




10 



20 



30 40 50 60 70 

PERCENT OF TOTAL GROUND AREA 



80 



90 



100 



FIG. 51 

per acre in 1923 ; l8 the average population density of the residential land 
in the smaller American cities in 1930 was 34.4 per acre. 19 

The area of Chicago, however, is widely extended in proportion to its 

16 Ibid., pp. 44, 60. 

*? Chicago Association of Commerce, op. cit. This included 500,000 persons living in 
three-flat buildings, 800,000 in apartment buildings larger than three-flat buildings, 325,000 
living in apartments over stores, and 36,000 living in apartments in the rear of stores. 

18 On the basis of the Chicago Zoning Report estimating 30,000 acres used for residential 
purposes in 1923 and the writer's estimate of 3,000,000 for the population of Chicago in 
1923. 

19 Bartholomew, op. cit., p. 61. 



294 ONE HUNDRED YEARS OF LAND VALUES 

population as compared with other metropolitan cities of similar size. 
If its people were distributed evenly over its land surface, there would 
be only 28 persons to the acre. Paris occupies only 15 per cent as much 
ground, and its density of population is nearly six times as great as that 
of Chicago. 20 Thus the space contained within the walls of buildings in 
Cook County, Illinois, which could be put in one forty-story building 
ij miles square, or in six-story buildings occupying 28 square miles, 
or in one-story buildings covering 166 square miles, actually averages 
two stories in height. Allowing for streets and alleys and for yard spaces 
covering half the lot, these buildings would use 83 square miles of 
ground. The intensity of utilization of the land by buildings varies 
from the Loop, where the average height of buildings is eleven stories, 
and where the ground occupying less than one-tenth of i per cent of 
the area of Cook County has 6 per cent of the floor space of Cook 
County, to the bungalow areas where only 27 per cent of the lot is 
utilized by a residence that is one story in height. 21 Finally, not only 
were 30 per cent of the lots in Chicago vacant in 1928, but another con- 
siderable area was occupied by parks, cemeteries, railroad rights-of- 
way , school grounds, and airports, where but a small part of the ground 
area was occupied by buildings. 

The corporate limits of a city may be extended to include wide tracts 
of vacant ground and even of farm lands. The amount of the vacant 
area between the main settled area of a city and the invisible line of 
the city limits that in modern cities is marked by no wall or line of 
fortifications has little bearing upon the density of urban population. 
Of much more importance is the density of population in the developed 
tracts or the amount of intervening vacant land between houses within 
the main settled areas. Chicago has not grown in a compact body, be- 
cause new transportation lines made it possible to pass over old areas 
that were partly built up in favor of virgin tracts that were not marred 
by obsolete buildings, and because the cupidity of owners frequently 
caused them to raise prices of land adjoining new improvements to 
prohibitive figures. Rather than pay such advanced prices for land, 
builders tended to jump several blocks ahead into another area. 22 

^Halbwachs, op. cit., p. 15. 

21 The average bungalow contains 1,000 square feet of floor space and occupies a lot with 
3,750 square feet of ground (records of the assessor's office of Cook County). 

22 Clifford Bechtel in an interview with the writer stated that this was the cause of the 
scattered nature of the development on Wabash Avenue south of Roosevelt Road. 



GROWTH OF CHICAGO AND ITS LAND VALUES 295 

B. THE SUPPLY OF CHICAGO LAND 

i. The practical limit to the supply of Chicago urban land. The in- 
crease in the number of people living in Chicago and in the amount of 
building space occupied by them thus required the utilization of in- 
creasing amounts of land for building sites. What has been the amount 
of ground surface in the Chicago area that has been available to meet 
this demand for additional ground-floor area? The total ground sur- 
face of the United States is, of course, almost absolutely fixed by na- 
ture. The entire area of the land within the city limits of all the cities 
in the United States of over 30,000 population in which over 45,000,000 
people resided in 1930 is, however, only one-fifth of i per cent of the 
land area of the United States. Even after allowing for indispensable 
farm land and for land not easily accessible to existing cities, it is ap- 
parent that the upper limit imposed by the physical surface of the 
United States is a very distant one when the possibilities of urban ex- 
pansion are being considered. The practical limit to the supply of urban 
land is set not by the total land surface of America but by the amount 
which is accessible to people working at a certain strategic spot. The 
supply of the urban land area and of the air space above the ground in 
Chicago has, in fact, been greatly increased in the past century by pro- 
jection of rapid-transit facilities outward from the center and the up- 
ward extension of steel-frame skyscrapers. The time and expense re- 
quired to go from the center of the city outward or upward, and not 
physical extension, determines the effective supply of urban land. 

a) Lateral expansion by more rapid transportation. Accessible build- 
ing space in Chicago in 1833 was the ground and the layer of air above 
the ground to a height of about 50 feet, within walking distance over 
dirt roads to the main channel of the Chicago River. Outward exten- 
sion began with plank roads and street railway lines. Omnibuses and 
horse cars which traveled at a rate of 6 miles an hour instead of a walk- 
ing pace of 3 miles an hour doubled the radius of settlement. Cable 
cars in the eighties, with a speed of 12 miles an hour, doubled the radius 
again along trunk lines. Suburban steam railroads and elevated elec- 
tric lines, traveling at from 25 to 30 miles an hour, again doubled the 
radius of settlement along their routes. 

The universal adoption of the automobile with a possible speed on 
superhighways of 60 miles an hour has enabled the worker to go twenty 
times farther from his factory to his home in an hour than he could in 



296 ONE HUNDRED YEARS OF LAND VALUES 

1836. The airplane extends the possible range from home to office to 
150 or 200 miles, although the location as well as the expense of landing 
fields greatly limits the general use of the air as a means of suburban 
transportation. 

The effect of doubling the radius of the settled area, if the settlement 
is carried to a full circle, is not merely to double but to quadruple the 
original area, for the area of a circle is obtained by multiplying a con- 
stant factor TT by the square of its radius. This rate of increase of area 
applies as well to a half-circle as to a full circle. Therefore as the in- 
creased speed of transportation has tapped a widening area on the 
outer edge of the city, the amount of land made available has increased 
at a rate greater than the increase in the length of track. The amount 
of new land has not increased by the square of the distance added by the 
new lines, because the supply of land so added has been confined to 
belts along the lines themselves and there are intervening spaces be- 
tween these radial lines that are less accessible. The supply of available 
ground sites in Chicago has been further limited by the lake on the east, 
which prevented the development of Chicago in a full circle from the 
center, and caused the city to expand farther to the west and south than 
it would otherwise have grown. 

b) The extension into the air. In addition to this extension outward, 
there has been an extension upward and downward. While the ground 
area of the city increased twenty fold from 1833 to 1933, the possible 
air space that could be occupied by buildings increased tenfold. The 
elevator and steel-frame skyscraper rising successively from nine, 
twelve, sixteen, twenty-two, to forty-four stories tapped the horizontal 
layers of air 100, 150, 250, and over 500 feet above the ground level. 23 
At the same time the raising of the level of the central business district 
of Chicago from 15 to 20 feet prior to 1859 enabled basements to be 
built. Taller buildings called for deeper foundations and deeper base- 
ments until today in the Chicago Loop there is an average of over one 
floor underground. The supply of land available for Chicago has been 
further increased by accretions along the lake shore. The Municipal 

2 3 The zoning law of 1923, which permitted the construction of towers above the twenty- 
two-story level, fixes no absolute height limit but provides that the tower part shall occupy 
not over one-fourth of the lot and that the space contained in it shall not exceed one-sixth 
of the entire building. On a lot large enough a one-hundred-and fifty-story tower would 
be possible, but the size of the lots so far utilized in the Loop have limited buildings to a 
height of forty-five or forty-six stories (Chicago Zoning Ordinance, par. 2 id). 



GROWTH OF CHICAGO AND ITS LAND VALUES 297 

Pier, the land in Streeterville, Grant Park, the Outer Drive, have all 
been "made" by filling in along the lake shore. Finally, the legal con- 
cept of horizontal layers of air which could be separated from the title 
to the ground has created a great volume of building space over rail- 
road tracks. Supported by piers over such railroad yards is the Mer- 
chandise Mart, the largest building in the world. A few more such 
gargantuan buildings could house the entire wholesale business of Chi- 
cago. A further large potential supply of land would be made available 
by rebuilding the blighted areas. 

Thus the supply of urban ground and air space that could be reached 
within an hour's ride or by prevailing construction methods in Chicago 
has so increased in the past century that there is no scarcity of air space 
for skyscrapers. If built up to the limits permitted by the present zon- 
ing regulations, it is estimated that the entire population of the United 
States could be housed in the city limits of Chicago. 24 Such intensive 
utilization of land would, however, require, the erection of steel-frame 
apartment skyscrapers in all the areas zoned for such use, and the added 
construction expense of so tapping these higher air levels is the cost 
of acquiring this increased supply of space. 

C. CAUSES OF DIFFERENCES IN LAND VALUES WITHIN CHICAGO 

i. The land-value contour map. Up to this point, the factors affect- 
ing the aggregate demand for Chicago building sites have been con- 
sidered without reference to the distribution of different types of uses 
and of different degrees of intensity of each use within the city. Even 
if the total land value of an urban region be determined by the popula- 
tion mass and by the combined rent roll, the distribution of that ag- 
gregate land value between the different areas of the city is still un- 
known. If the land values in Chicago were shown in the form of a re- 
lief map, in which the elevations represented high land value, a picture 
of startling contrasts would be disclosed. In the center would be the 
Himalaya Mountain peaks of the Loop, but on all sides except along a 
high ridge running north along the lake there would be a descent into 
the deep valleys of the blighted areas. Gradually, as one went farther 
from the center, the elevation would begin to rise. Along the lake, both 
north and south, would be a high ridge which slopes down sharply as 

2 * Estimate made in an unpublished study by the Chicago Regional Planning Associa- 
tion. 



298 ONE HUNDRED YEARS OF LAND VALUES 

one goes west. Beginning 5 or 6 miles from the center of the city, there 
would be a plateau several miles wide encircling the city that is up- 
tilted toward the lake, on top of which were high ridges a mile apart 
that culminated in towering pinnacles at each intersection. If a dollar 
a front foot in land value were represented by i foot in height on this 
map, the changes in elevation within the 211 square miles of Chicago's 
area would be greater than the differences in physical elevation of any 
part of the land surface of the globe, for the variation would be the 
same as from 5 to 50,000 feet above sea-level. Within a little over a 
mile one might drop from an altitude of 50,000 feet to one of 50 feet, 25 
and within a short block a person could fall from an elevation of 4,000 
feet to one of 25 feet. 26 What is the explanation of this unusually abrupt 
change? Why is it that when one passes from one street to the next 
land values rise or fall precipitously in some cases, while in other areas 
there are wide plains of substantially equal land values? 

The land- value pattern of a city that is illustrated throughout this 
book by land- value maps and by numerous charts is naturally of the 
greatest importance, particularly in a city like Chicago where such tre- 
mendous differences in land values exist. To explain the land-value 
structure of a city and the causes of the variations in value, it is neces- 
sary to go back to the beginning of the history of a city, to trace the 
manner in which each section of the city started to develop, and to show 
the direction of growth of different types of uses. That was one of the 
main purposes of the first part of this book. It is now necessary to 
bring the threads of that discussion together, and to illustrate by a 
series of charts and maps the course of progression during the entire 
century of the major factors causing differences in land values between 
different sections of the city in order that the separate effect of each 
factor may be demonstrated. 

When Chicago was a marshy plain entirely unimproved, who could 
tell which spot would sometime be passed by several hundred thou- 
sand people daily and which one would be in the heart of a slum? On 
that lot where a cow is grazing a forty-story building will rise. There 
where that pig is rooting will be a huge bank building. Go a short dis- 
tance away from this magic spot and the soil is just as good, the grass 
just as green, but the ground the cows trod on there is doomed to pro- 
's From State and Madison Street to Townsend Street near Chicago Avenue. 
26 From Forty-seventh and Ashland Avenue to Forty-sixth and Laflin. 



GROWTH OF CHICAGO AND ITS LAND VALUES 299 

duce nothing but shacks, gangsters, and land values that do not cover 
the cost of the street improvements. Miles farther away from the heart 
of the city there is land on which men will shoot snipe and plover for 
many decades after the city is founded that will surpass in value this 
ground that is so close to the city's center. What establishes the lines 
of cleavage between areas of intensive utilization and high land values 
and those less favored districts that will be thinly settled and used for 
purposes that yield low returns? Where will the main retail shopping 
area be located? What tracts will be selected for high-grade residential 
use or tall apartment buildings? What corners will be the center of an 
outlying business subcenter? What regions will command a premium 
for factory sites? These are the grand prizes. The person who could 
select these spots in advance will reap a fortune. The other areas the 
tracts occupied by the poor and middle classes, the low-grade outlying 
business locations, and the poorer industrial land will yield a profit to 
those who first develop them from farm land. Once such districts are 
improved with mediocre dwellings and filled with tenants who rank low 
in purchasing power, and there is little hope for a further rise in land 
value. Owners of vacant farm land on the city's edge have then a far 
better chance to reap the "unearned increment." 

In tracing the causes of the great differences in land values between 
different sections of the city, some of the main factors to be considered 
are the topography of Chicago, the origin and direction of movement of 
different types of uses, the points of settlement and lines of expansion of 
different races and nationalities, and the extent of vertical as con- 
trasted with lateral expansion of high land-value areas. 

2. Physical causes of land-value variations. Three main factors in 
the topography of Chicago have affected the pattern of its land values: 
the lake on the east ; the Chicago River and its two branches, forming a 
Y with its base on the lake, and a broad level plain west of the lake that 
interposes no barriers to lateral expansion. 

a) The effect of the lake. As has been noted, Chicago is situated on 
the west side of Lake Michigan near its southern tip. The lake pre- 
vented any appreciable growth on the east, and forced Chicago to ex- 
pand more to the north, south, and west than it would otherwise have 
done. As the lake curves toward the east as it proceeds southward from 
the northern to the southern limits of Chicago, the area available for 
settlement likewise expands as one goes south, so that the lake cuts off 



3 oo ONE HUNDRED YEARS OF LAND VALUES 

less than half of the arc of a full circle with a radius of eight miles from 
the center of the city. The lake also prevents the entry of highways and 
railroads directly from the east, but compels them to come into Chicago 
from the south around the bend of the lake. The lake finally provides 
what has lately come to be regarded as the "front yard" of Chicago, 
and land facing the lake has acquired the highest value for residential 
purposes. In the pre-railroad era, the lake was one of the principal 
avenues of approach to the city. 

b) The effect of the river. The Chicago River and its branches divide 
Chicago into its three main divisions the North, South, and West 
sides and thus sets up a barrier that caused the somewhat independ- 
ent development of each section. At the same time, by affording a 
meeting place of lake, river, canal, and railroad traffic, it provided dur- 
ing the first part of the city's history the medium for binding together 
the separate parts of the city's commercial and industrial life. Both 
sides of the Chicago River were lined with elevators, factories, ware- 
houses, and lumber yards; and from the point of view of water com- 
merce, it mattered little in which division of the city a factory on the 
river bank happened to be. The difficulties of crossing the river in early 
days, first, because of the scarcity of bridges and, later, because of their 
frequent opening and closing, proved to be very serious obstacles to the 
unity of the three sections of Chicago. The separation of the three sec- 
tions was further accentuated by the mode of development of the trans- 
portation systems. From the time of the first horse-car lines in 1859 
to the cable lines of 1881 and the elevated lines of 1892-1900, each sec- 
tion of the city virtually had an independent system of transportation 
leading to the central business district, with no transfer points or en- 
circling connecting system outside the downtown area. Hence each sec- 
tion has had a different rate of growth and a different land- value history. 

c) The Chicago plain. The Chicago plain affords practically un- 
limited room for urban growth to the west, south, and north. The few 
slight elevations that rise above it are at a premium for residential use, 
and there are no bluffs, steep hills, or ravines to prevent the even 
spreading of new buildings over the prairie. If the three sections of 
Chicago that are caused by the configurations of the Chicago River are 
considered, however, the amount of land available for use as one pro- 
ceeds in square-mile belts from the center of the city varies considerably. 
Thus in the south division, the south branch of the Chicago River which 



GROWTH OF CHICAGO AND ITS LAND VALUES 301 

splits off from the main channel less than a mile west of the lake curves 
eastward for its first two miles, forming a narrow bottle neck at Eight- 
eenth and State streets and limiting the available land area on the 
South Side within two miles from State and Madison streets to about 
one square mile. As the south branch and the Illinois-Michigan and 
Drainage canals turn southwesterly beyond Twenty-second Street, the 
South Side broadens out to cover an ever increasing territory. The area 
of the North Side is confined by the north channel of the river to a strip 
from two to three miles along the lake shore, and the land available for 
settlement within the first two miles from State and Madison streets 
was only about two square miles. On the West Side, however, the land 
area widens out both north and south, and within the first two miles 
from the center of the city, over five square miles were available for oc- 
cupation. Hence the West Side provided the space for the greatest ex- 
pansion of population when horse-car transportation limited the radius 
of city growth to a few miles from the center. 

d) The three sections of the city. The growth of the three sections of 
the city has proceeded at different rates in the various periods. The 
south division had the advantage in the fact that the land trails, rail- 
roads, and highways from the centers of population in the East and 
South entered the city through that section, and from the first it at- 
tracted the central business section. In the forties and fifties, the 
North Side, in the district south of Chicago Avenue near the present 
Michigan Boulevard, contained some of the finest homes, but in the 
period following the Civil War, the growth of the fashionable sections 
on the South Side was rapid. The West Side developed early as an in- 
dustrial and manufacturing area, and as factory workers settled near 
their places of employment, its population growth prior to 1873 ex- 
ceeded that of other sections. From the great fire of 1871 to the World's 
Fair of 1893, the development and rise of land values on the South Side 
outstripped that of the other divisions of the city, but after the panic 
of 1893 it went into an eclipse, and shortly thereafter the North Side 
and the north-shore suburbs attracted the leaders of fashion. From 
1900 to 1929 the North and Northwest sides as a whole recorded more 
rapid gains in land values than any other entire section of the city. 
After 1873 the old West Side east of Ashland Avenue and south of 
Chicago Avenue languished as a residential area, although the expan- 
sion of industry absorbed part of its space. 



302 ONE HUNDRED YEARS OF LAND VALUES 

3. The growth of different types of land uses. In all three sections of 
the city, however, areas devoted to the different types of uses developed 
near the common junction point of the divisions and grew away from 
this center in direct lines south, west, and north. 

a) The fashionable residential areas. Fashionable or high-grade resi- 
dential areas were started with the building of large homes or mansions 
on ample grounds, with carriage and servant quarters in the rear. These 
sections were located on the avenues adjacent to the best transporta- 
tion lines leading directly to the central business district, and in the 
beginning they were located within a few blocks of the principal shops 
and stores. Thus, as Figure 52 shows, on the North Side the finest resi- 
dential section in the forties and fifties was on Cass and Rush streets 
near Ontario Street, on the West Side it was on Washington Street east 
of Halsted Street, and on the South Side it was first on Washington 
Street and then on Wabash and Michigan avenues within the confines 
of the present Loop. From 1860 to 1873, with the first horse-car lines in 
all sections and the first suburban railroad service on the South Side, 
the North Side fashionable area shifted to Dearborn and LaSalle 
streets and expanded from Chicago Avenue to Lincoln Park along those 
streets. The West Side high-grade area grew westward along Washing- 
ton Street to Union Park at Ashland Boulevard, and the development 
also proceeded westward along Monroe, Adams, and Jackson streets to 
Ashland Boulevard. Ashland Boulevard was laid out as a fashionable 
street and the first homes were erected on it at this time. On the South 
Side the fashionable growth had proceeded south from Washington 
Street along Wabash and Michigan avenues, and at Eighteenth Street 
had swung eastward to Indiana, Prairie, and Calumet avenues and was 
projected southward along these avenues as far as Twenty-sixth Street. 
Thus by 1873 three main bands of fashionable growth, four to six 
blocks wide, had been developed like spokes of a half -wheel. The va- 
cant lots on these avenues for several miles beyond the settled portions 
had acquired values which reflected the anticipated high-grade resi- 
dential use. The continuation of the fashionable areas in straight-line 
projections along these avenues was favored by the placing of a belt of 
large parks in the direct path of growth, several miles beyond the fash- 
ionable settled area, and the development of boulevards leading from 
the high-grade areas to these parks. A vanguard of fashionable sub- 
urban settlements, like Kenwood on the South Side and Pine Grove 



MAP OF CHICAGO 

-SHOWING- 

EXTENSION OF 
AREA OCCUPIED 

BY 

HIGH GRADE RESIDENTIAL 

OR 

APARTMENT BUILDINGS 
1833-1933 



AREAS OF NEW GROWTH BY PERIODS 

LEGEND 

Bi BEFORE 1857 
Egjgjj 1857 TO 1873 
P^l 1874 TO 1899 
1900 TO 1933 




FIG. 52 



3 o 4 ONE HUNDRED YEARS OF LAND VALUES 

on the North Side, also guarded areas beyond from the intrusion of un- 
desirable elements. The exclusion of saloons from these chosen spots 
also preserved their high-grade character. Pushed by the growth of the 
business of the city from the rear and attracted by the lure of parks, 
boulevards, and fashionable suburbs ahead, rows of fine homes were 
built north, south, and west down the "avenues" in ever lengthening 
lines. In each section of the city there was a sharp line of demarcation 
between the fashionable belt and the slums that almost directly ad- 
joined it. On the North Side the dividing line was Wells Street, on the 
South Side it was State Street, and on the West Side it was Randolph 
Street or Lake Street on the north and Harrison Street on the south. 
In the eighties, Prairie Avenue between Eighteenth and Twentieth 
Street was the center of Chicago's most aristocratic homes. At this 
time Michigan Avenue was growing rapidly as a place of residence for 
Stock Yards magnates. On the West Side, Ashland Boulevard from 
Madison to Harrison streets, and Jackson Boulevard east of Ashland 
Boulevard, were in their heyday. The Lake Shore Drive, then known as 
"Potter Palmer's frog pond," was just beginning to develop . 

(1) The decline of Prairie Avenue. After the first World's Fair, 
Prairie Avenue on the South Side began to decline rapidly in impor- 
tance, as the segregated vice area was by that time only a few blocks 
west of it. On the North Side the movement away from Dearborn and 
LaSalle streets to the Lake Shore Drive gained momentum and the 
North Shore "Gold Coast" began to emerge as the social capital. On 
the West Side, Ashland Boulevard had passed its peak, and the growth 
of fine homes was now taking place along Washington Boulevard in the 
vicinity of Garfield Park. On the South Side those social leaders who 
did not migrate to the North Side moved farther out to Grand and 
Drexel boulevards and the Kenwood district. There was thus an east- 
ward shift of the fashionable home area of the South Side. The avenues 
from State Street east to Grand Boulevard began to be filled in with 
apartment buildings which gave a more intensive use to the land, but 
did not cause its value to rise beyond the values already anticipated be- 
cause of the expected extension of the fashionable-home area. The land- 
value changes of these different areas are shown in Figure 53. 

(2) The lake front grows in importance. Finally, in the twentieth 
century, and particularly after the World War, the relative value of 
land along the lake shore compared with land away from the lake great- 



GROWTH OF CHICAGO AND ITS LAND VALUES 



305 



ly increased. At first, land fronting on the lake was not considered so 
attractive because of the lake storms that sent spray dashing across the 
streets, because of the undeveloped nature of the sandy wastes along 

FLUCTUATIONS IN THE VALUE OF 
FASHIONABLE RESIDENTIAL LAND, 1865- 1933 

DEARBORN STREET NEAR GOETHE STREET ASHLAND BOULEVARD NEAR MONROE STREET 

MICHIGAN BOULEVARD NEAR It STREET PRAIRIE AVENUE, FROM 18 STREET TO 20 STREET 

LAKE SHORE DRIVE, SOUTH OF DIVISION STREET 

3000 



2100 



iaoo 



2 1500 



1200 




FIG. 53 

the lake front, and because sewage was dumped directly into the lake. 
While Michigan Avenue within the present Loop was occupied by 
fashionable homes in the forties and fifties, Wabash Avenue in the same 
vicinity was preferred to Michigan Avenue because it did not face the 



LAND VALUES IN OUTLYING HIGH GRADE AREAS 
DEVELOPED AFTER 1900 

AREA BOUNDARIES: ROGERS PARK -HOWARD, LAKE MICHIGAN, DEVON, ASHLAND 
SOUTH SHORE-67, YATks, 71, STONEY ISLAND 
AUSTIN -CHICAGO,CENTRAL,MADISON, AUSTIN 

67 AND CICERO -79, CRAWFORD, 87, CICERO 



87 AND CICERO AREA WAS NOT DEVELOPED IN THIS ENTIRE PERIOD 




FIG. 54 



GROWTH OF CHICAGO AND ITS LAND VALUES 307 

lake storms, and as the expansion of the area proceeded southward on 
a straight line, it grew farther from the lake. On the North Side, land 
on the lake shore south of Chicago Avenue was occupied first by the 
settlement occupied by disorderly persons known as the "Sands" and 
later it became the precinct of Captain Streeter, the celebrated squat- 
ter. The growth of the fashionable north-shore towns along the lake, 
beginning even in the sixties, and the building of Sheridan Road and of 
North Side elevated lines had caused the North Side fashionable de- 
velopment to get started along the lake front at many points. On the 
South Side the colored influx into the old fashionable area in the ave- 
nues from State Street east to Grand Boulevard and farther east to Cot- 
tage Grove Avenue forced the fashionable settlement to turn eastward 
to the lake front. On the South Side, also, the advantages of Jackson 
Park and the Illinois Central suburban transportation along the lake 
front, which was considered the best in the city, also gave higher value 
to the lake-front lots. Not the least in importance, however, was the 
turning of sewage away from the lake, the development of bathing 
beaches, and the completion of outer drives, which permitted automo- 
biles to speed along the lake front without stopping for cross-streets. 
Automobile traffic reaches its heaviest concentration along the lake 
shore and this is both a cause and effect of high land values for resi- 
dential purposes, for it has a maximum of transportation advantages. 
Finally, in the era from 1922 to 1929, fringes of tall apartment build- 
ings were erected along the lake shore on the North Side from Chicago 
to Howard Avenue and on the South Side from Fifty-first to Seventy- 
fifth streets. This intensive land use made possible high land values. 
As Figure 36 27 shows, practically all of the tall apartment buildings in 
Chicago are along the lake shore, and those along Michigan and Cot- 
tage Grove avenues not so located were built in the boom of 1890 to 
1892. Thus, as illustrated by Figures 55 and 56, a cross-section of resi- 
dential land values from the lake westward indicates that not only do 
land values slope upward toward the lake, but that the differential be- 
tween the value of land near the lake and that farther away greatly in- 
creased from 1910 and I928. 28 The reason for these higher land values is 
to be sought not merely in the more intensive use of land as evidenced 
by tall apartment buildings, but also in the higher rents paid for the 

2 "> See pp. 308-9. 

28 Based on George C. Olcott's Land Values Blue Books of Chicago (1910 and 1928). 



308 



ONE HUNDRED YEARS OF LAND VALUES 



same space. In 1933 apartments on the Gold Coast on the north shore 
of the lake rented for fifty dollars a month per room, while apartments 
away from the lake rented for as low as five dollars a month per room. 



RESIDENTIAL LAND VALUES 

ONE BLOCK NORTH OF DIVISION STREET 

LAKE MICHIGAN TO LARAMIE 

1910 AND 1928 




FIG. 55 

While there is a considerable difference in the quality of construction in 
the two cases, this would by no means account for the tenfold difference 
in rents. 

The land along the lake shore in Chicago has thus come to be utilized 



GROWTH OF CHICAGO AND ITS LAND VALUES 



39 



for the highest and most intensive residential types of development. 
The fringe of land on the eastern edge of Chicago was held at too high a 
price and was too limited in amount to provide space for the two- and 



RESIDENTIAL LAND VALUES 

SOUTH SIDE-BETWEEN 55 AND 56 STREETS 

FROM LAKE MICHIGAN TO CRAWFORD AVENUE 

1910 AND 1928 




FIG. 56 

three-story apartment buildings known as "walk-ups" because they 
have no elevators, which house over half of the population of Chicago. 
Accordingly, these apartment districts spread westward from the lake 
just beyond the old settled areas in the period from 1910 to 1928 and 
they filled in vacant tracts between old suburban towns along the rail- 



310 ONE HUNDRED YEARS OF LAND VALUES 

roads. The two major axes of these developments were Lawrence Av- 
enue on the North Side and Seventy-ninth Street on the South Side, 
which were the business streets of a rapidly growing area contiguous 
to them. At the same time, on the West Side, the old high-grade belt 
between Washington and Jackson boulevards spread out fan-shaped 
west of Cicero Avenue to include Oak Park and Austin. Thus by 1933, 
as Figure 52 shows, the high-class residential areas of Chicago include 
a belt of land running continuously along the north shore far beyond 
the city limits, which spreads out fanwise and runs westward on both 
sides of Lawrence Avenue, another belt running along the lake front 
from Fifty-first Street southward to the beginning of the factories at 
South Chicago at Seventy-ninth Street, where it curves westward along 
Seventy-ninth Street to Ashland Avenue (see land- value maps), and 
the West Side high-grade area that spreads out west of Cicero Avenue, 
with Madison as its center line. There are also high- value residential 
areas on the South Side along the Rock Island Railroad in Englewood 
and Beverly Hills. The higher-grade residential land is thus located 
not only near the lake, the parks, and the best transportation lines, but 
when new developments were made away from the lake, they tended to 
take virgin prairie tracts that were not marred by old and obsolete im- 
provements or by an undesirable class of people. 

While the development of faster means of transportation, such as 
cross-town electric surface cars, elevated extensions, or electrified rail- 
roads, thus permitted the fashionable residential neighborhoods to push 
farther away from the center of the city, the old mansions on Prairie 
Avenue, LaSalle Street, Washington Boulevard, and Ashland Boule- 
vard were being converted into boarding-houses or light manufacturing 
establishments, or were being torn down to make room for factories or 
warehouses. Michigan Boulevard lots on the South Side for a time ac- 
quired a value for use for automobile showrooms that even exceeded at 
some points the values they formerly possessed for fashionable resi- 
dential use, the expansion of the Loop northward gave a speculative 
market for old boarding-house property on the near North Side which 
raised it above the former peaks, and the growth of factories westward 
from the Chicago River revived the values of old residential areas there. 
As Figure 53, shows, however, the decline of these once fashionable 
residential areas, when their mansions become obsolete, is not neces- 
sarily followed by a new type of use that restores the former value. 



GROWTH OF CHICAGO AND ITS LAND VALUES 311 

b) Cheap residential areas. Land areas in Chicago occupied by the 
unskilled and semi-skilled laboring classes must necessarily comprise a 
greater amount of ground than those sites used for the abodes of the 
wealthy or middle classes, because the poorer groups in society are more 
numerous and because, in Chicago, they tend to live in cottages or two- 
apartment buildings rather than in tenements. While in the eighties 
and nineties the rich occupied with their mansions lots that would hold 
ten or twenty houses of the poor, today the reverse is true. The rich 
live in tall elevator apartments, and the poor tend to occupy a small 
house with yard space. Nevertheless, prior to 1929 the wealth and in- 
come of all classes in American society had so increased that the cheapest 
residential land, or that less than fifty dollars a front foot, while com- 
prising a considerable area, 29 was worth in the aggregate far less than 
the higher-grade residential or business land. 

Like the fashionable areas, these poorer areas had their points of 
origin and their lines of progression. Workingmen's cottages tended to 
grow up in all sections of the city between the belts of fashionable land 
and the industries and factories along the Chicago River. They filled 
in the spaces not wanted for industries or for high-grade residences. 
The tracts they occupied were close to the noise and dust of factories 
but not directly contiguous to water or rail transportation. Such sites 
were poorly provided with street improvements and with surface-car 
transportation. The people who remained in such neighborhoods were 
the lowest in economic status, intelligence, and ambition since the 
more progressive elements tended to move to better neighborhoods as 
soon as possible. Located often near railroad yards or terminals, they 
suffered from proximity to the vagrant population of tramps and home- 
less men. Foreign colonies tended to locate in such sections, because 
they were nearest to the railroad stations at which they first arrived in 
the city, because they found their fellow-countrymen there, and be- 
cause the quarters there were the cheapest and no worse than those to 
which many of them were accustomed in Europe. The buildings in 
such areas are seldom replaced, because when the cheap character of a 
residential neighborhood is once thoroughly established, builders pre- 
fer to invest their labor and materials in sections that have not yet ac- 
quired an adverse character. Consequently, as the survey of the Chi- 
cago Plan Commission, based on the insurance atlases, shows, prac- 

2 ' See land-value maps for the different periods. 



3 i2 ONE HUNDRED YEARS OF LAND VALUES 

tically all of the buildings in these so-called blighted areas were forty or 
more years old in 1933. 

The manner in which the cheaper residential areas were extended, 
and in which acre tracts in advance of them reflected the cheap use to 
which they would ultimately be put, has a history as well as the mode of 
growth of the fashionable avenues. On the North Side patches of 
shacks early developed west of Wells Street near the industrial plants 
along the river. The factories and carshops on the West Side caused 
workingmen's boarding-houses to spring up along Lake Street near 
Halsted. The factories and lumber yards along the river resulted in 
workingmen's settlements in the near West Side, down Roosevelt Road 
and Blue Island Avenue. On the South Side, Irish laborers settled at 
Bridgeport in 1848 after working on the canal. The section in the down- 
town area west of Wells Street and south of Madison Street was a vice 
area in the fifties and sixties, and when it was cleared out by the fire 
of 1871, these elements of the population established a new center of 
saloons and vice dens west of State Street and south of Harrison. A 
colored population in this same area moved after a fire in 1874 to Dear- 
born and Federal streets south of Twenty-second Street. Between then 
and 1915 the colored belt had extended down to Thirty-ninth Street, 
but it was confined in the region west of State Street to the Rock Island 
tracks. Meanwhile, the segregated vice area after 1893 became con- 
centrated in the vicinity of Eighteenth to Twenty-second street, from 
State Street to Dearborn, where it remained until 1912, when it was 
abolished by a reform movement. 

Thus the cheaper and poorer residential sections moved in lines of 
progression from the downtown areas even as did the fashionable areas. 
Another factor entered into the situation after the great fire of 1871. 
This was the tendency of the working classes to build wooden houses 
the only kind they could afford in a belt around the settled parts of 
the city just beyond the fire limits. This belt was broken at those 
points where it came into contact with the bands of fashionable resi- 
dential land, however, for the high speculative values at which these 
tracts were held precluded their use as homes for unskilled laborers. 

(i) Expansion of racial and nationality groups. From 1900 to 1929 
there began an expansion of racial and national groups in these old 
areas. The new immigration from Poland, Russia, Italy, and Czecho- 
slovakia had displaced the older Irish, German, and Scandinavian ele- 



GROWTH OF CHICAGO AND ITS LAND VALUES 313 

ments in the sections near the present Loop even by 1900, and they 
had formed close, compact colonies near the downtown area. An ex- 
pansion of these races now began to take place along definite paths. 
The Jews from their ghetto east of Halsted Street on Maxwell moved 
westward between Roosevelt Road and Sixteenth Street to Douglas 
Park and beyond. The Italians north of Roosevelt Road and east of 
Halsted Street expanded westward between Harrison and Roosevelt 

FLUCTUATIONS IN THE VALUE OF CHEAP RESIDENTIAL LAND 
CHICAGO, 1890-1931 



1890 1895 1900 1905 1910 7575 1920 1925 1930 1935 




FIG. 57 

Road to Cicero Avenue and beyond, and another colony of Italians 
near Grand Avenue east of the north channel of the river proceeded 
westward along Grand Avenue. The Poles on the North Side moved 
from their original base near Chicago and Milwaukee avenue along the 
line of Milwaukee Avenue to Irving Park Boulevard, and the Poles on 
the South Side expanded their section southwest from the Stock Yards. 
The Czechoslovakians, who had originally settled near Eighteenth and 
Blue Island Avenue, moved down Blue Island Avenue to Twenty- 
second Street and thence west on that thoroughfare to Cicero and 
Berwyn. Meanwhile, a great influx of colored workers from the South, 



314 ONE HUNDRED YEARS OF LAND VALUES 

beginning during the World War, had burst the barrier that confined 
their race west of State Street and filled the territory to Cottage Grove 
Avenue on the east and Sixty-seventh Street on the south. Another 
segment of colored people penetrated the old area along Lake Street as 
far west as Western Avenue. Figure 58 shows the extent of the area oc- 
cupied by these groups in IQ33. 30 

The significance of these racial and national movements upon Chi- 
cago land values lies in the fact that certain racial and national groups, 
because of their lower economic status and their lower standards of 
living, pay less rent themselves and cause a greater physical deteriora- 
tion of property than groups higher in the social and economic scale. 
Because of the instability of the tenants, high collection losses, and the 
aversion of persons higher in the social order to living near these 
classes, the rents received are capitalized at higher rates, so that they 
yield lower capital values than property yielding the same net in- 
come in the most desirable areas. Land values in areas occupied by 
such classes are therefore inevitably low. Part of the attitude re- 
flected in lower land values is due entirely to racial prejudice, which 
may have no reasonable basis. Nevertheless, if the entrance of a col- 
ored family into a white neighborhood causes a general exodus of the 
white people, such dislikes are reflected in property values. 31 Except in 
the case of negroes and Mexicans, however, these racial and national 
barriers disappear when the individuals in the foreign nationality 
groups rise in the economic scale or conform to American standards of 
living. Hence, the classification given below applies only to members of 
the races mentioned who are living in colonies at standards of living 
below those to which most Americans are accustomed. While the rank- 
ing given below may be scientifically wrong from the standpoint of in- 
herent racial characteristics, it registers an opinion or prejudice that is 
reflected in land values; it is the ranking of races and nationalities with 
respect to their beneficial effect upon land values. Those having the 

3 This map is based on U.S. Census tracts and reports of real estate rental agents. See 
map by Halbwachs, op. cit. 

3* This phenomenon seems strange to a foreign observer. "II s'est produit alors un 
phenomene tres curieux. Des que les negres ont r6ussi a prendre pied dans quelques 
maisons, alors, dans toute la rue, sur une longueur de 4 ou 5 km., quelquefois de 7 ou de 8, 
les maisons vident, les appartements deviennent vacants, les blancs disparaissent, cedant 
la place aux nouveaux venus" (ibid., p. 22). 



MAP OF CHICAGO 

-SHOWING- 
AREA OCCUPIED BY 

PREDOMINANT RACIAL OR NATIONALITY GROUPS 

1933 



LEGEND 

NEGRO 

ITALIAN 

POLISH 

JEWISH 

CZECHOSLOVAKIAN 




1 



FIG. 58 



ONE HUNDRED YEARS OF LAND VALUES 



most favorable come first in the list and those exerting the most detri- 
mental effect appear last. 32 
i. English, Germans, Scotch, Irish, Scandi- 



6. Greeks 

7. Russian Jews of the lower class 

8. South Italians 

9. Negroes 
10. Mexicans 



navians 

2. North Italians 

3. Bohemians or Czechoslovakians 

4. Poles 

5. Lithuanians 

While precise information on rents between different racial and na- 
tional groups is lacking, Table XXXVII shows that native whites rank 
highest and negroes lowest in the average amount of rents paid. 

TABLE XXXVII* 

PERCENTAGE OF TOTAL RENTED HOMES OF EACH GROUP IN 
CHICAGO FALLING WITHIN GIVEN RENTAL CLASS, 1932 



Rent 


Native White 


Foreign-born 
White 


Negro 


Under $30 


1C 7 


22 7 


36 2 


$30 $49 


24 3 


26 8 


20- 3 


$'\O~$74. 


37 6 


27 3 


2C C 


$7C $QQ 


132 


8 


6 i 


$100 or over 


7 2 


37 


o 8 


Not reporting 


2 O 


I c 


2 I 










Total 


IOO O 


IOO O 


IOO O 











* Department of Commerce, Bureau of Census, release, September 7, 1932. 

The entire effect of low land values in areas occupied by these races, 
considered objectionable, cannot be attributed to the race or national- 
ity alone, however, for these groups have frequently moved into old 
areas that were in a state of deterioration already. There can be little 
doubt, however, that the presence of the colored population in the areas 
east of State Street is the specific cause of lower land values there, for 
in the district east of Cottage Grove Avenue from Thirty-ninth to 
Fifty-first Street, which is occupied by white persons, the land values 
in the opinion of the tax assessors for 1931 are three times as high as the 
land values in the colored belt just west of Cottage Grove from Thirty- 
ninth to Fifty-first Street. While the land just east of Cottage Grove 
Avenue has better improvements and is a little closer to the lake and 

* The list was prepared chiefly by John Usher Smyth, West Side real estate broker. 



GROWTH OF CHICAGO AND ITS LAND VALUES 317 

would bear a higher value on that account, it also suffers from proxim- 
ity to the colored section, so that a considerable part of the difference in 
land values is due to the difference in the race of the tenants. In many 
cases, however, the undesirable racial factor is so merged with other 
unattractive features, such as proximity to factories, poor transporta- 
tion, old and obsolete buildings, poor street improvements, and the 
presence of criminal or vice elements, that the separate effect of race 
cannot be disentangled. 

The expansion of these racial and national groups has perhaps had 
a greater effect in promoting a rise in the values of land in the outer 
areas of the city than it has had upon the older areas, for it has forced 
or stimulated the old American stock to seek new neighborhoods and 
has caused them to migrate from their old homes. Even these races 
themselves have pushed farther from the center of the city, leaving be- 
hind an area to be occupied by the least desirable members of their 
own race. As new immigration from Europe has almost ceased, and as 
industrial expansion in these near-in areas has come to an end, there is 
now very little demand for these areas for any purpose, and the prob- 
lem of the blighted area, or the ring of land between the central busi- 
ness districts and the outer areas of new growth, has become more 
acute. As Figures 57 and 59 show, land values in these old areas have 
increased but slightly since 1890. 

In addition to the old cheap residential areas near the Loop, there 
are newly developed areas occupied by cottages and bungalows on the 
fringes of the city. As the space just beyond the old settled areas has 
been occupied by the new apartment buildings, as already noted, the 
bungalow and small-home areas have been forced still farther out. On 
the South Side west of Western Avenue and south of Eighty-seventh 
Street, and on the North Side west of Crawford Avenue, are great areas 
of bungalows the modern cottage for the family of moderate means. 
This land, developed from raw acreage, had phenomenal increases in 
value from 1918 to 1928, despite its lack of intensive use, but any fur- 
ther advance is definitely limited by its small-home use. 

c) Industrial areas. As Figure 60 shows, the industrial areas of 
Chicago spread northward and southward along the branches of the 
Chicago River during the days when lake and river commerce were of 
paramount importance, and with the emergence of belt-line railroads 
and of specialized manufacturing districts with switch-track connec- 



LAND VALUES IN OLD AREAS SETTLED BEFORE 1873 



AREA BOUNDARIES: NORTH- NORTH, HALSTED, CHICAGO, ASHLAND 
WEST - ROOSEVELT, HALSTED, 22, ASHLAND 
SOUTH- 31, HALSTED, 39, ASHLAND 



100,000 




/87B 1890 

YEARS 

FIG. 59 



MAP OF CHICAGO 

-SHOWING- 

EXTENSION OF 
AREA OCCUPIED 

BY 

MANUFACTURING AND 
- INDUSTRIAL BUILDINGS 
1833-1933 



AREAS OF NEW GROWTH BY PERIODS 
LEGEND 

Hi BEFORE 1857 

[HJIgij] 1857 TO 1886 

HI 1887 TO 1910 

MM 1911 TO 1933 




FIG. 60 



320 ONE HUNDRED YEARS OF LAND VALUES 

tions, factories began to move away from the Chicago River to loca- 
tions along switch tracks. A direct connection with a railroad siding is 
a great advantage in the quick and economical shipment of goods, and 
the new manufacturing districts offered services of freight cars in pick- 
ing up less than carload lots at factory doors. With the advent of the 
motor truck and the establishment of freight depots outside the Loop, 
it was no longer necessary to be within horse-and-wagon hauling dis- 
tance of a downtown freight station. By moving out, the factory owner 
could obtain cheaper land, on which he could afford to construct one- 
story buildings that would permit continuity of operation with its at- 
tendant economies. There was a further advantage in savings in taxes 
when the site was just outside the city limits, as in the case of the Clear- 
ing district. Industries locating in industrial districts could also be near 
associated or allied industries which would unite with them to eliminate 
objections property owners adjoining might file against them, and they 
could also secure the advantages of flexible layouts of ground and plant 
that permitted expansion without crossing streets or alleys. As a re- 
sult of this movement away from the center, the values of near-in in- 
dustrial land on the Chicago River have remained stationary for several 
decades, and there is now very little demand for most of the five-or 
six-story buildings without switch-track connections on the near South 
or West sides. Consequently, it cannot now be asserted that these 
blighted areas are in a state of transition or are awaiting a definite ab- 
sorption by industry. 

d) Outlying business centers. The section lines established by the 
surveyors laid down the geometric pattern of the business subcenters 
of Chicago. These straight lines, a mile apart, became "through" 
streets, as did also some of the natural trails or radial highways. 33 Such 
roads were the first to be improved with planks or macadam and be- 
came successively the routes of omnibus, horse-car, cable, and electric 
lines. Taverns, blacksmith shops, grocery stores, and other shops tend- 
ed to locate along these streets because they provided access to the 
greatest number of people. By 1873 Madison Street, west of the river 
to Racine; Clark Street, north of the river to Lincoln Park; State Street 
and Cottage Grove at Twenty-second Street all had become leading 
local business streets. Other streets passing through poorer neighbor- 

M For the impression which the rigid checkerboard pattern of Chicago made upon a 
French observer, see Halbwachs, op. cit., p. 44. 



MAP OF CHICAGO 

-SHowiNG- 
INDUSTRIAL LAND VALUES-I93I 



VALUES PER SQUARE FOOT 

HH $1.00 AND OVER 
EggS .50 TO .99 
{gfl .12*2 TO .49 
flUH .12 AND UNDER 



BASED ON 1931 ASSESSMENT OF 
LAND IN COOK COUNTY BY I. L. JACOBS 




FIG. 61 



322 ONE HUNDRED YEARS OF LAND VALUES 

hoods, such as Halsted Street, Blue Island Avenue, Milwaukee Avenue, 
North Wells Street, and Archer Avenue, were second-grade business 
streets, or the "rialtos of the slums." 

The intersection of main horse-car routes had produced, even by 
1873, peak values at certain points beyond the central business district, 
notably at Madison and Halsted streets values only a little below 
that of State and Madison streets. 34 The tendency of the section-line 
streets to develop into commercial thoroughfares had been noted early, 
and the following statement of the real estate editor of the Chicago 
Tribune made in 1884 summarizes the development as one that had 
long been recognized. 

The section and division streets have a greater significance than the surveyors 
ever dreamed of. Being in all cases through and unbroken thoroughfares, they 
have become, with few exceptions, business centers of the localities through which 
they pass. Thus the streets running east and west, Madison, i2th, i6th, 22nd, 
35th and 3Qth streets on the south, and Chicago, Division, North, Centre, and 
Fullerton on the north, contain stores and markets supplying local neighborhoods. 
North and south the same is true of Halsted, Center (Racine) and Western. 
Oblique cross streets such as Lincoln, Clybourn, Milwaukee, Blue Island, Archer, 
and Cottage Grove also have become business streets. 35 

The growth of stores along full section-line streets and at transfer 
points of horse-car and cable lines continued during the eighties, and 
by 1893 corners with a land value ranging from $1,000 to $1,500 a 
front foot had developed at Thirty-ninth Street and Cottage Grove 
Avenue, and at Thirty-first Street and Indiana Avenue. The antici- 
pated business development of Forty-third, Forty-seventh, and Sixty- 
third streets on the South Side was also being considered at that time. 
When Charles Yerkes constructed street-car tracks in the section-line 
streets of the Northwest Side in the nineties, the prospective utilization 
of these thoroughfares as business streets was reflected in a sharp ad- 
vance in their selling prices long before there was any actual develop- 
ment. 36 

The building of the elevated lines gave a setback to the continued 
growth of business subcenters as the new lines carried people to the 

34 In 1873 the value of the corners of Madison and Halsted streets was $1,500 per front 
foot and that of the corners of State and Madison streets $2,500 a front foot. 

35 Chicago Tribune, August 23, 1884. 

3 6 Statement of Alonzo H. Hill, a director in some of the Yerkes traction lines, made to 
the writer in September, 1933. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



3 2 3 



rising Loop department stores. In 1910, as Figures 62, 63, 64, and 65 
show, land values sloped sharply downward away from the central 
business district along Madison, State, Clark, and Michigan streets. 

LAND VALUES ON STATE STREET -CHIC AGO AVENUE TO 55 STREET 
1873, 1910, 1928 




Uj Uj Ui 

^ s 



<t Q: 

fc k 


STREET 


STREET 


STREET 



FIG. 62 



The number of outlying business corners in 1910, as Figure 39 shows, 37 
was relatively small in the light of later development. Then from 1910 
to 1915, and from 1921 to 1928, came those remarkable spurts of out- 

37 See above, p. 253. 



324 



ONE HUNDRED YEARS OF LAND VALUES 



lying business centers until, as Figure 40 shows, 38 the number of valu- 
able corners outside the Loop had by 1928 greatly increased. 

In the boom following the World War, enough land 5,000,000 
front feet was zoned for business in Chicago to support a population 

LAND VALUES ON MADISON STREET-STATE STREET TO CENTRAL AVENUE 
1873, 1910, 1928 




FIG. 63 

of 10,000,000 while miles of business frontage were laid out on all the 
highways leading into Chicago. The value of the business land in Chi- 
cago exceeded in 1928 that of all other land. 

3 8 See above, p. 254. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



325 



Figures 67, 68, and 69 show the pattern of these business land values 
on major outlying streets. Since nearly every street falling on a full- 
section or half-section line was zoned for business, the lines along which 
business development might take place were known in advance, and the 

LAND VALUES ON MICHIGAN AVENUE -CHICAGO AVENUE TO 55 STREET 
1873, 1910, 1928 




FIG. 



optimistic hopes of speculators made it appear that every street zoned 
for business would actually be so occupied. It will be noted how regu- 
larly land values reach peaks at section-line intersections or transfer 
points. Such peak values were partly sustained by the competition of 



326 



ONE HUNDRED YEARS OF LAND VALUES 



drug stores, banks, and chain stores for locations. In many cases, how- 
ever, the values were based on hypothetical projections of the rate of 
growth of the business area based on the records of the few years be- 

LAND VALUES ON NORTH CLARK STREET-ROOSEVELT ROAD TO LAWRENCE AVENUE 
1873,1910,1928 




FIG. 65 

fore. Any land near a double-section corner sold for a high price, re- 
gardless of the actual business done or the volume of traffic passing the 
point. 

(i) Store rents and traffic counts. In the depression of 1932, it was 
found, however, that in certain locations there was a great difference 



GROWTH OF CHICAGO AND ITS LAND VALUES 



327 



between the flow of pedestrian traffic and of potential purchasing power 
between the two sides of a street at a transfer corner and also that there 
was a sharp drop in the flow of traffic in a short distance. The grada- 
tion of actual rents paid was found to correspond very closely with this 
flow of traffic as Figure 66 shows, which is sometimes subject to sudden 

THE RELATIONSHIP BETWEEN STORE RENTS AND PEDESTRIAN TRAFFIC COUNTS 

STORE RENTS- MONTHLY RENTS OF INSIDE STO RES, 25 XBfr FEET, STEAM HEATED-JUNE 1932 



WEST SIDE OF COMMERCIAL STREET 
89 TO 93 STREETS 



EAST SIDE OF MICHIGAN AVENUE 
110 TO 114 STREETS 





















I 
i 












i 
1 












j 

i 
: 












L 






k 




..... 








TRAFFIC C 
> 5 





i 

j 





T: 


120 


6,000 


1 r 


^ 


EN7S 


-1 


90 




2 


TRAFFIC 


COUNTS- 


4 
















I) 

1 




\ 

* 




K 

i 

V 


! 
i 


K 

! I 

> * 

: J 


' 











^ 


















1 


















; f 


SREN 


rs 






16,000 








\ 




















h 


















i f 








fc. 




v 


3 




i 

1 













.1 ( 


^TffAfi 


7C COW 


- i 


















! 


























































i. 




2,000 
O 
















O 



FIG. 66 



and capricious changes, so that land values may depend in the future 
more closely upon a study of the actual potential purchasing power rep- 
resented by the people passing a store and less upon a graduated chart 
rising and falling at regular intervals. 

e) The central business district of Chicago. Although the population 
of Chicago moved farther away from the central business district, and 
the area immediately contiguous to it began to decay, the Chicago 



328 



ONE HUNDRED YEARS OF LAND VALUES 



downtown district maintained steadily rising land values. The Chicago 
transportation systems were so routed as to pour the residents of the 
three sections of the city successively by omnibuses, steam railroads, 

LAND VALUES -COTTAGE GROVE, HALSTED, CICERO AVENUES 
1928 




TREET 


TREET 


TREET 


\ 


TREET 


I 


TREET 


i 

5 J 


5 S3 

? ? 


TREET 


TREET 


'TREET 



FIG. 67 

horse cars, cable cars, elevated lines, electric surface lines, electrified 
railroads, and automobiles into the central business district. No outer 
belt of passenger transport lines encircled the city. Until the last few 
decades at least, it was necessary to pass through the downtown area to 
go from one part of the city to another. Even today that is usually the 
most convenient way. 



GROWTH OF CHICAGO AND ITS LAND VALUES 329 

Tables XXXVIII, XXXIX, and XL show how the Chicago Loop 
buildings under the pressure of expanding business confined to a 
limited area have tapped successively higher layers of air. By 1893 

LAND VALUES ON MILWAUKEE AVENUE 
1910 AND 1928 



EAST-WEST STREETS INTERSECTING MILWAUKEE AVENUE 




NORTH -SOUTH STREETS INTERSECTING MILWAUKEE AVENUE 



FIG. 68 



over 10 per cent of the air layer from seven to twelve stories had been 
filled with buildings, and the highest towers extended to sixteen stories. 
By 1923, when the new zoning law permitted tower buildings that con- 



330 



ONE HUNDRED YEARS OF LAND VALUES 



tained as many as forty-four stories, 37 per cent of the area from seven 
to twelve stories had been occupied, 17 per cent of that between twelve 
and sixteen stories, and over 6 per cent of that between sixteen and 

LAND VALUES ON 63 AND 79 STREETS-STONY ISLAND TO CRAWFORD AVENUES 

1928 




FIG. 69 

twenty-two stories. From 1923 to 1930 a new crop of a score of tower 
buildings arose in Chicago, which created a new skyline and tapped the 
layer of air that contained as much cubic air space as all of that which 
buildings had previously penetrated. Yet, as Figure 70 shows, these 



GROWTH OF CHICAGO AND ITS LAND VALUES 331 



TABLE XXXVIII 

PERCENTAGE OF CUBIC FEET AT GIVEN HEIGHTS TO TOTAL CUBIC 
FEET IN AREA (CENTRAL BUSINESS DISTRICT) 



Building Height in Stories 


1836 


1856 


1873 


1893 


1923 


1933 


Ground 6 


IOO O 


IOO O 


OO 7 


SA 3 


60 2 




712 


o o 


o o 


O 3 


12 ^ 


26 7 


28 I 


13 16 


O O 


o o 


o o 


30 


8 3 


T-2 7 


17-22 
2344. 


o.o 
o o 


0.0 

o o 


o.o 
o o 


O. 2 

o o 


4-8 
o o 


9.8 

2 2 
















Total 


IOO O 


IOO O 


IOO O 


IOO O 


IOO O 


IOO O 

















TABLE XXXIX 

PERCENTAGE OF AIR SPACE AT DIFFERENT HEIGHTS OCCUPIED 
BY BUILDINGS (CENTRAL BUSINESS DISTRICT) 



Building Height in Stories 


1836 


1856 


1873 


1893 


1923 


1933 


Ground 6 


O 2 


30 o 


40 o 


61 o 


8? o 


82 4 


712 . . 


O.O 


o.o 


I O 


IO 3 


37 2 


TO I 


1 3 1 6 


O O 


o o 


o o 


3-2 


17 O 


36 7 


1722 


o o 


o o 


o o 


O 2 


6 3 


17 4 


2344 


o o 


o o 


o o 


o o 


o o 


I 07 

















TABLE XL 

CUBIC FEET OF SPACE ABOVE THE BLOCKS IN THE CENTRAL 
BUSINESS DISTRICT OF CHICAGO 



BUILDING HEIGHT 
IN STORIES 


TOTAL Cu. FT. 
AIR SPACE 


No. or Cu. FT. OCCUPIED BY BUILDINGS 


1873 


1893 


1923 


1933 


Basement area 










101,200,000 
343,000,000 
209 , ooo , ooo 
102,000,000 

72,500,000 

16,200,000 


First 6 stories (0-72 

ft.). .. v ... 
7-12 stories (73-144 
ft.) 


416,520,000 
416,520,000 
277,680,000 
416,520,000 
1,522,220,000 


150,000,000 
500,000 


290,000,000 
43,000,000 
10,000,000 
800,000 


350,000,000 
155,000,000 
48,250,000 
27,500,000 


13-16 stories (145-92 
ft) 


' ......... 
17-22 stories (193- 
264 ft.) 
23-44 stories (265- 
^28 it} 





Total above base- 
ments 








3,042,440,000 


150,500,000 


343,800,000 


580,750,000 


742,700,000 












1 III 





I 


J p. p p 

J UJ u ij 

i 1 ! I 


(72 FEET) 


_ 
u 

C 

? 



S3 idois jo aig MOM NI 



GROWTH OF CHICAGO AND ITS LAND VALUES 333 

new towers filled only i per cent of the air layer into which they jutted, 
and the space in these towers represented only 2 per cent of all the 
space in the buildings in the central business district. 39 

This vertical expansion of the Loop was made possible and necessary 
by the completion of elevated lines on the South, West, and North 
sides, which were routed to pour their traffic into the limited iron-bound 
circuit known as the "Loop." A different system of transportation, 
such as that of the subways, might have spread this development out in 
a longer line, or a different routing of the elevated system might have 
developed a concentration point elsewhere; but the Loop land- value 
pattern as it developed was the inevitable result of the laying-down of 
a transportation system which intensified the natural advantages of the 
Loop area. 

The rapid development of the north shore and the Gold Coast after 
1900, the great increase in the number of automobiles after 1910, and 
the opening of the Michigan Avenue link bridge did, however, combine 
to break the iron bands of the Loop after 1920. The new double-decked 
Michigan Avenue opened a channel across the river for the flow of 
automobile traffic to the Gold Coast and the north shore. The fashion- 
able carriage trade that had developed South Michigan Avenue now 
spread northward. 

39 This computation and those following showing the air space occupied by buildings in 
the Loop at different periods were made in the following manner: The calculations were 
first made for the year 1933. The height of every building in the central business district 
of Chicago in the area north of the middle of Van Buren Street to the river on the north and 
west and to Grant Park and Beaubien Court on the east was determined by actual inspec- 
tion. The number of cubic feet in every building in this area was obtained from the 
measurement made by the assessor for taxation purposes in 1931. The cubic feet in base- 
ments given in these same measurements were subtracted from the totals, which included 
the basement areas. For each building the total cubical content above the ground was 
divided by the number of stories to obtain the average cubic content of each floor. The 
total space in towers in each building is separately given by the assessor's measurements. 
Allowances were also made for setbacks in buildings or unusual variations between the 
cubic content of different floors in each building. The averages for each floor thus de- 
termined were multiplied by the number of floors in each building falling within the height 
limits shown in the chart. It is important to note that the chart shows only the cubic con- 
tent of each class taken as a total. Thus the content of the air space occupied by the first 
six stories contains one-, two-, three-, four-, and five-story buildings. The vacant air space 
up to the six-story level includes not merely vacant ground, but the air space above build- 
ings lower than six stories. 

Having thus determined the air space occupied by Loop buildings in 1933, the age of 
all buildings standing in the Loop was ascertained from the records of the county assessor's 



334 ONE HUNDRED YEARS OF LAND VALUES 

In the last boom from 1923 to 1929, the central business district ex- 
panded laterally as well as vertically. Skyscrapers were erected out- 
side the circuit of the elevated lines on North Michigan Avenue, on the 
new Wacker Drive along the south bank of the river, on South Michi- 
gan Avenue south of Van Buren Street, and on Madison Street at the 
south branch of the river. On the North Side at the forks of the river 
was completed in 1930 the huge Merchandise Mart. Thus the amount 
of cubic air space in which it was sought to project buildings was in- 
creased by doubling the ground area laterally and by doubling the air 
layers vertically. Such expansion, made possible by the reckless bond 
financing of the neo-gilded age, could not be maintained. Already there 
has been a tendency to contract from the outposts of the Stevens Hotel 
and the Civic Opera Building, which are too far from the main center of 
business to be profitable at the present time. 

The area occupied for retail uses in Chicago expanded following the 
completion of the elevated Loop, so that the wholesale trades were 
pushed out of Wabash and Michigan avenues by 1910. The removal of 
the South Water Street market in 1922 and the completion of the 
Wacker Drive likewise expelled the wholesale trades from the north 
end of the central business district. The wholesale district is now chief- 
ly confined to the area west of Wells Street to the river, from Madison to 
Harrison Street, and this area has suffered since 1930 from the competi- 
tion of the Merchandise Mart on the north bank of the river. The fi- 
nancial center along LaSalle Street has expanded vertically rather than 



office. The height distribution of the cubic content of existing buildings that were also 
standing at the periods shown in the chart was then computed. To this were added compu- 
tations for buildings torn down, estimates of the cubic content for which were obtained 
from the records of the Economist. This carried the record back to 1872. 

Estimates for the periods prior to the fire of October 9, 1871, which destroyed all build- 
ings in the present Loop, were made from computations from photographs of the city show- 
ing the character of buildings in the area. 

The accuracy of the foregoing chart and tables is therefore greatest for the recent 
periods; the margin of error is greatest for the early periods. Some of these early figures, 
however, are highly accurate, as it was known, for instance, that in 1836 and in 1856 there 
were no buildings in Chicago over six stories in height, and that in 1873 there were very- 
few such buildings. 

In these calculations, spires of churches, monuments, and flagpoles on the tops of tall 
buildings have been ignored, as the purpose has been not to show maximum heights estab- 
lished by such objects, but to indicate the rentable building space at different height levels. 
The total number of cubic feet of air space over the Loop does not include that over streets 
and alleys. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



335 



laterally, a succession of new buildings on the same sites providing the 
needed growth. These buildings fronting on LaSalle Street or Jackson 
Street near LaSalle have, however, been extended to cover entire 
blocks and thereby carried over the influence of the main financial 
street to the adjoining streets. 

The continual growth of the central business district of Chicago for a 
century has required successive crops of buildings on the same site to 
meet the demands of different or more intensive uses. Since 1830 at 
least six different structures have occupied the southeast corner of 
Washington and LaSalle streets, each of which in turn was expected to 

TABLE XLI 

CUBIC CONTENTS OF BUILDINGS IN CHICAGO CENTRAL BUSINESS 
DISTRICT BY AGE GROUPS (INCLUDING BASEMENT AREA) 



Classification 
According to 
Date of Erection 


No. 
Buildings 


Percentage 
Total 
Number 


Cubic Content 


Percentage 
Total 
(Cubic Con tent) 


Percentage 
Average Depre- 
ciation in 1928 


1871-87 
1888-1900. . . 
1901-20 
IQ2I-33 

Total . . . 


230 

168 
125 
84 


37- 9 1 

27.69 
20.60 
13.80 


97,109,713 
160,657,824 

353,544,243 
234,458,055 


11.47 
19.01 
41.80 
27.72 


63.0 

47-5 
23.0 
9.0 


607 


IOO.O 


845,759,835 


IOO.OO 


22. 



endure for many years. There are probably few spots in the downtown 
district which have not been occupied by at least three, if not four, sets 
of buildings. Along LaSalle Street, where the replacement has occurred 
more frequently than on any other street, thirteen-story skyscrapers 
with a structural life of a century or more have been torn down to give 
room for twenty- two- or forty-four-story tower buildings. The age of 
the buildings in the Loop as given in Table XLI shows, however, that 
a great many of the buildings erected just after the fire of 1871 still 
survive. Yet, in cubic content, these buildings are of far less importance 
than the ground area covered by them would indicate. Most of the 
sites occupied by them are awaiting conversion to a higher and better 
use. Table XLI shows the number of cubic feet by age groups, includ- 
ing basement space, of the buildings standing in 1933 in the area bound- 
ed by the lake, the river, and the center line of Van Buren Street. 40 
Thus, as Table XLI shows, approximately 70 per cent of the cubic 

4 From the property record cards of the county assessor of Cook County, Illinois. 



336 ONE HUNDRED YEARS OF LAND VALUES 

space in the present Loop has been built since 1900. The heart wood of 
the organic Chicago is constantly replacing old tissues with new ones, 
in marked contrast with the static condition of the belt of dead wood 
around the Loop known as the "blighted area" which has ceased to 
grow. 

Tall buildings do not necessarily develop high land values, for the re- 
turns may not pay for the added building costs. Some of the highest 
land values on State Street, as, for instance, the Woolworth Store 
south of Washington Street, are derived from business mainly con- 
ducted on the first floor and in the basement. 

It is difficult to classify the uses of the central business district by 
cubic space because there is some overlapping. Table XLII indicates, 
however, the major classifications. 

TABLE XLII 

PRINCIPAL TYPES OF USES OF CENTRAL BUSINESS 
DISTRICT OF CHICAGO 

Type of Building Cubic Ft. Occupied 

Department stores 105 ,000,000 

Hotels 65,000,000 

Theaters 15,000,000 

Office buildings 350,000,000 

Of these uses, department stores have been static for a decade, as 
have also legitimate theaters. The numerous bank consolidations have 
left a dozen vacant bank floors in the Loop, which it is difficult to con- 
vert to any other use. There was, before the opening of the World's 
Fair, at least a temporary surplus of hotel space. 

The fact that the central business district of Chicago has not moved 
out of the square mile of land surrounding State and Madison streets in a 
century and after 1882 almost ceased to spread has caused the intense 
utilization and the tremendous increase of land values in that area. As 
Table XLIII shows, the value of the land in a district that represented 
only one- tenth of i per cent of the land area within the 1933 corporate 
limits of Chicago has varied from one-eighth to two-fifths of the value 
of a territory approximately one thousand times as large. The relative 
importance of the land value in this concentrated area as compared with 
the rest of the land in the city, however, has risen and fallen. The early 
importance of this district in 1836, when it contained most of the set- 



GROWTH OF CHICAGO AND ITS LAND VALUES 



337 



tied area of Chicago, and in 1856, when it had within its boundaries a 
retail and wholesale area that had risen rapidly in value, had declined 
with reference to the rest of the city by 1873 as a result of a suburban 
movement stimulated by horse-car lines, steam railroads, and the parks. 
At that time fashionable residential land on Prairie Avenue was worth 
nearly half as much as land on the best retail shopping streets in the 
downtown area. The coming of the elevated lines, skyscrapers, and the 
State Street department stores caused a strong centralizing movement, 
and from 1873 to 1910 land values in the central business district rose 

TABLE XLIII 

LAND VALUES IN CENTRAL BUSINESS DISTRICT AND 
ENTIRE AREA OF CHICAGO COMPARED, 1836-1926 

(Millions of Dollars) 



Year 


Loop Land Value 


Percentage of 
Value of Land 
for the Entire 
City 


1836 


$ 2 


20 o 


1856. . 


?c 


28 o 


1873. . 


72 


12 < 


1802. . 


ISO 


23 3 


IQIO 


600 


AQ Q 


y 
IO26 


I OOO 


2O O 









from 12.5 to 40 per cent of the aggregate values for the entire city. 
After 1921 the centrifugal forces again gained the ascendancy with the 
rise of the outlying neighborhood centers and the shift of population 
outward, and the proportion of Loop land values to aggregate land 
values for the city dropped from 40 to 20 per cent when Loop values 
rose only 67 per cent from 1910 to 1928 compared with a rise of 233 
per cent for the city as a whole. 

In view of the high percentage of the entire land value of the city 
that is represented by the value of this limited area, and in view of the 
great differences in values between different parts of this Loop, it has 
been considered desirable to show the land values of this section block 
by block for important peak and valley years. Accordingly, in Figures 
71, 72, 73, 74, and 75 value data that will tend to establish the contours 
and elevations of these Himalaya Mountain peaks of Chicago land 
values for a century are given. 



MAPS OF PART OF THE CENTRAL BUSINESS DISTRICT OF CHICAGO 

-SHOWING- 

VALUATIONS OF INDIVIDUAL LOTS FORTHE PERIODS 
1830,1836,1854-1856 AND I870H873 



1830 

BASED ON SALES FROM 1830-1832 
SOURCE: A.T. AN ORE AS.'HI STORY OF CHICAGO". 



1836 

BASED ON SALES ON JUNE 20, 1636 
SOURCE' REPORTED IN THE CHICAGO AMERICAN- JULY 23. I83S 



1870-1873 

BASED ON SALES 
SOURCE: EVERETT CHAMBERLIN -CHICAGO AND ITS SUBURBS. 1874 




FIG. 



MAPS OF PART OF THE CENTRAL BUSINESS DISTRICT OF CHICAGO 

-SHOWING- 

VALUATIONS OF INDIVIDUAL LOTS FOR THE PERIODS 
1896,1909-1913,1925-1928 AND 1931 



1896 

BASED ON APPRAISALS BY THE SWIFT TAX COMMISSION-I8D6 
SOURCE: ECONOMIST-MAY 16,1896 



1909-1913 

BASED ON SALES AND LEASES 
SOURCE: ECONOMIST -MARCH 28.1914 




IPS 

1925-1928 

BASED ON SALES AND LEASES 
SOURCE: ECONOMIST- APRIL 21,1928 




FIG. 72 



MAPS OF THE CENTRAL BUSINESS DISTRICT OF CHICAGO 

-SHOWING - 

LAND VALUES FOR THE YEARS 1830,1836,1856, 1873 

IN DOLLARS FOR AN AVERAGE FRONT FOOT IN EACH BLOCK INCLUDING 
INSIDE AND CORNER LOTS WITH A DEPTH OF HALF A BLOCK 

1836 




1830 
JU 






130 130 200 



TjBBBOBB^g* 



joi isQsQsi || |s| n is 






TpDiDBBBiBDOf tDOB'BBBOOr 



1856 



-rt^vS rS n n n n n n n i i i i r 
1873 



iv-~ -- 

\ / / 2j-Dn"[iz]^[izii 8 nnczii] s nnnLii 

~1 ' IOOO IOOO IOOO 1250 1250 IOOO IOOO 75O 

I>BsBBBBBBB 

"*- ^ 500 550 600 700 700 700 700 7OO 

lAHiHORiFMITtm 





400 SCO 500 7SO 



750 IOOO BOO IOOO 00 



SO 250 300 



750 BOO IOOO 2100 IZOO 1500 l00 IOOO 

GOBOBBffiDQi 

TOO 2000 1600 2000 2000 1200 

jiascqinnsnni 

iOOO 



=1 oo: 







rn rfn n n n n n i i i i r 



^ I ! 

i V* ^ 



, 5 

I i 1 

FIG. 73 



n n n n n i i i i r 



i ! M s 1 



MAPS OF THE CENTRAL BUSINESS DISTRICT OF CHICAGO 

-SHOWING - 

LAND VALUES FOR THE YEARS 1894,1910,1928,1931 



1894 





1910 



2600 3i25 3310 2470 2oo 2soo 



J23S 3440 3800 3280 2560 




J,JLL 




2650 3300 4250 4000 3400 



3070 3235 4330 5750 5750 4425 



- **,- ~~ ^. - ---- --- ..... -- 

BiBOBlBBiBOBO 

~ l - M 2SOO 8*50 I50 6200 6S5O 8550 5900 250O , 5OOO OOO SOOO 11500 12500 11800 II50O 75OO 



QBBOBQDDCD 



3000 4300 



750 3750 5400 



13200 12500 SOOO 



I005O I4OOO IIOOO 5400 



IOOOO IOOOO IIOOO BOOO SOOO 



OOBOBBO 

SO 2600 5000 7000 7OO OOO 96OO 900O 

]S| 1*1 i"i i*[ inl Hi il l 

500 3730 4400 85OO 8OO I20OO IIOOO 10440 6500 

goOSBCSWOne 



GOBI 
IJBOBBBIBiDDIDDi 

6500 12000 ISOOO I6OOO 19000 2OOOO ISOOO 

BOBIBiBIDlDi 

5000 8000 IIOOO 13000 ISOOO 17000 16000 ISOOO 

OBiBIBIBODir 

6000 IIOOO 13000 14000 I700O 17000 ISOOO 
600012000200002000014000 16000 17000 14000 

1ODIQOO i DIDOC 

50 4600 8000 6000 7000 7000 60OO IOOOO 



rn n n n n n 




1928 





n n n n n n 
1931 



IOOOO IOOOO IOOOO IOOOO IOOOO .0000 IOOOO 





3700 5000-5500 8000 85OO 7250 6000 8000 



2JiBBeiHiBBiBiffliBBi 

I - H ' ' ' ' ,,.,.. --....- jjooo JOOOQ 50000 - 3800 4500 9000HOOOO 13000 14000 ISOOOI7SOO 12000 



5250 8000 15000 I875 



9000 12000 20000 3SOOO 35OOO 45000 45OOO 3SOOO 

SiBiBIBIBIBiDlDi 

6000 IOOOO ISOOO 22500 22SOO 3250O 32500 30OOO 

Dl 
*l 

8000 6000 IIOOO 16000 200OO 25000 2! 



2750030000 22SOO 270OO 27OOO 270OO 



ODIDIBIDID IB O 

i i n n n n n n n i 

| 
I ! S , I . 

i M I I 




FIG. 74 



MAPS OF THE CENTRAL BUSINESS DISTRICT OF CHICAGO 

-SHOWING- 

LAND VALUES FOR THE YEARS 19 10, 1921,1928, 1931 



IN DOLLARS PER FRONT FOOT FOR A LOT IN THE MIDDLE OF THE BLOCK. 
WITH A DEPTH OF 100 FEET 



1910 





192, 




2000 2000 2000 1750 1500 






eeSBBCO 

3500 5000 6000 6000 6000 5000 4000 

OOBiBiBiBOO 




2500 3000 



BDODiB DiD 



1928 



5OQiDlBPDJ]QDg! 

r" 2000 2000 2500 3500 4SOO 5OOO ~ 450O 4OOO 

TT""U i i 1 n n r~i I 

1931 



r~i n n n n 




4000 5500 5500 



475005250 5500 5000 6 

?an]oas[^8[: 



3000 3750 6000 60 

IIP* 



ST. 3000 4500 S5OO 7000 7500 eccO 8000 7000 

rDGiBOBOBIDBGQf 

450O 500O 550O 7500 II 000 I30OO 13000 SOOO 6000 

IBBiBiBlBiBiBiOO 



3250 4250 6500 7500 BOOO 9000 8000 7000 



, 3500 4500 ""}S oo ovuu 80O 900 BOOO OCO 

SOUyBoQfflQDQt 

i 







f 1 I I 

I i i 



FIG. 75 



GROWTH OF CHICAGO AND ITS LAND VALUES 343 

In Figures 71 and 72 sale prices or valuations of entire lots or parcels 
in part of the central business district are shown, and in Figures 73, 74, 
and 75 computed front-foot values are presented. In the earlier periods 
up to 1873, when whole lots were sold and when the differences between 
corners and inside lots were not so great, the problem of land values in the 
central business district was relatively simple. Since 1890, however, the 
computation of values in the Loop has become far more complex be- 
cause of the splitting of the original lots into smaller holdings or the 
combination of several lots into larger plots of irregular size and the in- 
creasing importance of corner influence and depth factors. Valuations 
by George C. Olcott and by the tax assessors since 1910 have been on 
the basis of a standard front foot in the middle of the block with a depth 
of 100 feet. As this has become a familiar and somewhat customary 
standard for purposes of comparing recent Loop land- value trends, 
valuations made on this basis by Olcott for 1910, 1921, 1928, and by the 
tax assessor for 1931 are presented in Figure 75. 

Since lots in the central business district as originally platted were 
from 1 60 to 190 feet in depth, and early sales were made on that basis, 
it is evident that front-foot valuations with a depth running to the 
middle of the block cannot be compared with later valuations applying 
to a front foot with a depth of 100 feet. Since modern depth rules could 
not be correctly applied to earlier conditions to reduce the earlier val- 
ues to a loo-foot depth basis, valuations have been prepared showing 
recent Loop land values on a basis of a front foot running to the middle 
of the block, and also on the basis of an average front foot for the entire 
block including corners. The earlier land- value maps were computed 
on the same basis, so that the eight land- value maps in Figures 73 and 
74 are strictly comparable. 

Inasmuch as an increase of depth from 100 to 180 feet adds 43.2 per 
cent to the front-foot value and corner premiums add as high as 60 per 
cent to the front-foot value according to the rule applied by the tax 
assessor in 1931, such a method of computation adds considerably to 
front-foot values given on a loo-foot basis. The values in Figure 74, 
which are based on sales and leases, show amounts that are considerably 
higher for 1910 and 1928 than the Olcott figures, even after the addition 
to Olcott's value is made for depth- and corner-influence factors. This 
is due to the method employed by the writer consistently in this book 
of registering the sales value of properties and not conservative ap- 



344 ONE HUNDRED YEARS OF LAND VALUES 

praisals. Some extremely high leases were disregarded in computing 
the front-foot values shown in Figure 74, but the writer did not deem 
it proper to discount Loop leases or to ignore speculative sales in the 
central business district, when they entered into valuations made else- 
where. 

In Figures 71 and 72 sales data and tax valuations are presented for 
parcels actually sold or valued, so that the reader may make his own 
comparisons as to increases in land values for part of the Loop area for 
the period of the century. 

In Table XLIV the land values per front foot for the north-south 
streets in the central business district are presented for both boom and 
depression years in each cycle from 1830 to 1931. 

/) Summary: Chicago land values by types of uses. Tables XLV 
and XLVI summarize the movement of land values in Chicago from 
1910 to 1933 by principal types of uses. 41 

D. THE LONG-RUN TREND OF CHICAGO LAND VALUES 

So far Chicago land values have been discussed in terms of current 
dollars and no adjustments have been made for changes in the level of 
either prices, wages, or interest rates. In order to measure the gain in 
land values that would have occurred had the price level, wage, and in- 
terest rates been stationary, Fig. 77. has been prepared. Since Chicago 
land values rose after the first great declines in the level of wholesale 
prices in the Civil War and World War periods, and since the rise in 
prices prior to 1836 and 1857 was moderate while that prior to 1890 was 
negligible, the correction of the current dollar figure of Chicago land 
values for changes in wholesale prices does not greatly affect the rise of 
land values in boom periods. Because of the long-run upward tendency 
of prices, particularly since 1900, however, the deflation for changes in 
the purchasing power of the dollar does lower the height of the last 
peak in 1926-28 as compared with earlier peaks. 

i. Corrections of the land-value data for changes in wholesale prices, 
wages, and interest rates. It is questionable as to whether or not correc- 
tion on the basis of the wholesale price index, including the prices of 
many raw materials and of farm products, is the appropriate method of 
deflation for urban real estate. In the city, the cost of urban goods and 

41 Based on the writer's computations of the data in Olcott, op. cit. (1910, 1929, and 
I933)- 



GROWTH OF CHICAGO AND ITS LAND VALUES 



345 



TABLE XLIV 

LAND VALUES ON NORTH-SOUTH STREETS IN THE CENTRAL BUSINESS 

DISTRICT OF CHICAGO, 1830-1931 

(In Dollars per Front Foot for an Average Front Foot, Including 
Corners Running to the Middle of the Block) 



BLOCK 


DEPTH 


1830 


1836 


1841 


1856 


1861 


1873 


1877 


1894 


1910 


1928 


1931 


E.F. 


W.F. 


Wack.-Lake 


State Street, 5,856 Feet 


160 
160 
1 60 
160 
160 
1 60 
160 

IOO 


171 
"3 
151 
151 
143 
147 
144 
I4S 


0.60 
0.25 
0.15 

O.IO 

(0.07) 
(0.05) 

(0.02 
(o.oi 


1 60 
IOO 

67 
40 
25 

23 

20 

19 


(12) 

(12) 

o 

(?) 

(5) 

& 


(500) 
(550) 
(400) 
300 
300 
250 
ISO 
(IOO) 


(200) 
(250) 

(200) 
2OO 
2OO 
(ISO) 
(IOO) 
(IOO) 


,000 

,200 

,750 

,000 

,750 

,Soo 

,250 

,000 


500 

800 

1,200 

1,000 

1,000 

800 
600 
500 


3,900 
4,700 
10,800 
13,600 
11,000 
10,000 
9,Soo 
7,850 


6,000 
12,000 
21,000 
27,500 
31,000 
27,300 
25,000 
20,000 


20,000 
25,000 
35,000 
50,000 
SS.ooo 
50,000 
40,000 
25,000 


7,600* 
18,350* 
25,OOO* 
28,000* 
28,000* 

26 , ooo* 
24,500* 
i 7 , ooo* 


Lake-Rand 


Rand -Wash 


Wash.-Mad 
Mad -Mon. 


Mon.- Adams 
Adams-Jack 
Jack.-VanB 

Wack.-S. Water... 
Water-Lake 


Michigan Avenue, 4,472 Feet 


112 
132 
129 
I6 3 
163 
I6 3 
l6 3 
I6 3 
163 


62 

70 
70 


(0.50) 
(0.20 
(0.12) 
(0.08) 

(0.05) 
(0.04) 
(0.02) 
(o.oi) 
(o.oi) 


(150) 

(100) 

(90) 
(80) 
(70) 
60 

45 
40 
30 


5 

2 


700 
650 

550 
(500) 
(450) 
(400) 
(350) 
(300) 
(250) 


350 

(300) 
(250) 

(200) 

(175) 
(150) 
(125) 

(100) 
(100) 


,000 
,000 
,000 
,000 
,5oo 
,200 

,200 

,000 
,000 


(400) 
(300) 
(300) 
(300) 

300 
400 
300 
250 
250 


,150 

,444 
,150 
,500 
,880 
3,700 
4,000 
4,000 
4,500 


3,500 
4,000 
4,750 
6,000 

10,000 

15,000 
16,500 
16,500 

20,000 


20,000 
18,000 
17,500 
15,000 
30,000 
30,000 
27,000 
27,000 
25,000 


10,500 

I I , 000 

12,000 
12,000 

17,500 
17,500 
17,500 
17,500 
16,250 


Lake-Rand 


Rand-Wash 
Wash -Mad 


Mad.-Mon 
Mon.-Adams 
Adams- Jack 
Jack.-VanB 

Wack -Lake 




Wabash Avenue, 5,837 Feet 


171 
206 
151 
151 
170 
!74 
171 

120 


216 
220 
163 
163 
171 
170 
171 
163 


(0.50) 
(0.40) 
(o.io) 
(0.03) 
(0.02) 
(o.oi) 
(o.oi) 
(o.oi) 


(100 

(50 
(30) 

(25) 

19 

17 
17 
16 


3 
3 


(400) 
400 
(400) 
(350) 
(350) 
(300 
(250 

(200) 


(200) 
(200) 
(200) 

(175 
(i75 
(150 
(125) 
(100) 


800 

,200 
,200 

,250 

,100 
,100 

,100 

,100 


(400) 

(Soo) 

(500) 

500) 
400) 
400 
500 
(400) 


3,500 
4,500 
4,500 
7,000 
6,340 
6,200 
6,000 
6,000 


10,000 
10 , 500 

12,000 
I3,OOO 
13,200 
13,300 
13,200 
9,500 


17,500 
14,000 
i7,5oo 
21,000 
28,000 
22,500 
22,000 
15,000 


8,ooot 
8, soof 
13, Soof 
iS.ooot 
iS.ooot 
I3,ooot 

I2,OOOt 
II.OOOJ 


Lake-Rand 
Rand.- Wash 
Wash-Mad 
Mad.-Mon 
Mon.-Adams 
Adams-Jack 
Jack .-Van B. . . 


Wack -Lake 


Dearborn Street, 6,531 Feet (Including Plymouth-Federal) 


160 
160 
1 60 
160 
1 60 
1 60 
1 60 
66 


160 
1 60 
1 60 
160 
1 60 
160 
160 
70 


0.55 
0.33 
(0.20) 
(0.15) 
(o.io) 
(0.03 
(0.02 
(o.oi) 


267 
1 60 
62 
33 
25 

& 

(22) 


(50) 

(25) 

(7) 
(3) 

(2) 

(2) 
(2) 
(i) 


500 
550 
600 

550 
(300) 
(150) 

(IOO) 

(100) 


(250) 
(275) 
(300) 

(275) 
(150) 
(100) 
( So) 
( So) 


666 

900 

1,000 
1,300 
1,300 
1,000 
1,000 

800 


(350) 

(450) 
(Soo) 
(650) 
(650) 
(Soo) 
(Soo) 
(400) 


3,570 
4,550 
7,200 
10,650 
9,000 
8,700 
10,440 
5,075 


4,200 
8,000 
13,000 
17,000 
17,500 
17,500 

16,500 
11,000 


12,500 
16,000 
23,000 
25,000 
25,000 

22,000 
22,000 
I2,5OO 


S.ooo 
7,700 
11,700 
12,500 
14,750 
14,000 

II, OOO 

7,000 


Lake-Rand 


Rand-Wash 
Wash.-Mad 


Mad.-Mon 
Mon.-Adams 
Adams- Jack 
Jack.-VanB 

Wack.-Lake 
Lake-Rand 
Rand-Wash 
Wash.-Mad 
Mad.-Mon 


Clark Street, 5,898 Feet 


160 
160 
160 
1 60 
160 
1 60 
125 
107 


160 
160 
160 
1 60 
160 
1 60 
160 
103 


0.50 
0.30 

O.2O 
O.IO 

0.05 
0.03 

O.O2 
O.OI 


180 

IOO 

75 
28 
(20) 
(18) 
d7) 
(16) 


1 


o) 

3 
II 

2) 
2) 
I) 


600 

700 
800 

1,000 

800 
600 
500 

1,000 


(300) 
(350) 
(400) 
(300) 

(200) 
(IOO) 

(100) 

(IOO) 


600 

700 

1,300 
1,700 
1, 600 
1,300 
1,300 

1,000 


(300) 
(35o) 

(650) 
(750) 
(800) 
(600) 
(600) 
(500) 


3,300 
4,930 
8,740 
9,730 
9,745 
9,570 
7,000 
5,000 


7,000 

13,500 
14,000 
18,000 
20,000 

20,000 

21,000 
13,000 


IO.OOO 
I4,OOO 
2I,OOO 
29,OOO 
3O,000 
26,OOO 
25,000 
17,500 


5,600 
7,800 
12,000 
13,800 
14,000 
13,200 
14,000 
7,000 


Mon.-Adams 
Adams Jack . 


Jack.-Van B 





* East side of street. 



t West side of street. 



346 ONE HUNDRED YEARS OF LAND VALUES 

TABLE XLIV Continued 



BLOCK 


DEPTH 


1830 


i8 3 < 


1841 


1856 


1861 


1873 


1877 


1894 


1910 


1928 


IQ3I 


E.F. 


W.F. 


Wack.-Lake . . , 


LaSalle Street, 6,466 Feet (Including Sherman Street) 


160 
1 60 
1 60 
160 
1 60 
160 
160 
87 

IOO 


160 

1 60 
160 
160 
160 
160 
177 
i5 
87 


0.30 

O.2O 
O.IO 

0.05 

0.03) 
0.02) 
o.oi) 
(o.oi) 
(o.oi) 


160 
90 

So 
30 

(20 

(18 
d7 
(16 
(i5 


(30) 

(20) 

(5) 

(2) 
) (2) 
) (2) 
) (I) 
) (l) 
) (I) 


500 
600 
700 
800 
(7oo) 
(Soo) 
(300) 
(200) 
(200) 


(250) 
(300) 
(35o) i 
(400) i 
35o) i 
250) i 
(150) i 
(100) 
(100) 


Soo 
700 
,200 
,800 
,Soo 

,200 
,OOO 
500 
500 


300 
350 
400 

(500) 
(400) 
(300) 
(200) 

(ISO) 
(100) 


3,200 

3,820 

7,340 

10,000 

9,400 

7,600 
8,000 
6,000 
6,000 


3,6s< 
6,6o( 

I2,50C 
20,00< 
20,OOC 
20,00< 
2I.OOC 
I2,50C 
I2,5OC 


3 I5,OOO 
3 17,500 

> 27,000 

533,000 

> 33, ooo 

335,000 

> 35, ooo 
) 15,000 
) 15,000 


6,500 
7,500 
13,500 
16,000 
17,000 
17,250 
17,250 
7,000 
7,000 


Lake-Rand 
Rand.-Wash.... 
Wash.-Mad 


Mad. Mon 


Mon.- Adams 


Adams- Jack 
Jack-Van B 


Sherman 


Wack.-Lake 
Lake Rand 


Wells (Fifth Avenue) Street, 5722 Feet 


1830 


1836 


1841 


1856 


1861 


1873 


1877 


1894 


1910 


1928 


1931 


0.50 
(0.30) 
(0.15) 
(0.07) 
(0.05) 
(0.02) 
(o.oi) 
(o.oi) 


1 60 
86 
48 
30 
(28) 
(25) 

(22) 
(20) 


( 


20) 

to) 

(3> 
(2) 
(I) 
(l) 
l) 
I) 


250 
400 
400 
400 
250 
200 
ISO 
IOO 


150 

200 

225 
225 
I7S 
IOO 

75 
So 


500 
500 

1,000 

1,100 

800 

700 
500 
300 


(250) 

(250) 

(500) 

(SSo) 
(400) 
350 
250 
ISO 


Si 

3 
Si 

4! 

3, 
3, 


260 
600 
800 

IOO 

ooo 
500 
800 

ooo 


5 
5 
5 

7 
6 
5 


,000 

,000 

,000 
,250 

,000 

,500 

,000 

,000 


10,000 
10,000 
12,500 
12,500 

II, OOO 

10,000 
10,000 
8,000 


3,250* 
3,750* 
4,750* 

5,000* 

4,600* 

5 , too* 
5,ioo* 
4,500* 


Rand.-Wash 
Wash -Mad. 


Mad.-Mon 
Mon.- Adams 
Adams- Jack 
Jack.-Van B 

Wack.-Lake 


Franklin Street, 5721 Feet 


(0.60) 
(0.40) 
(o . 20) 
(o.io) 
(0.05) 
(0.04) 
(0.03) 
(0.03) 


1 60 
IOO 
52 

A 

(20) 
(18) 
(16) 


(15) 

(8) 

(3) 

(2) 

(I) 
(l) 
(I) 
(l) 


125 

ISO 
200 

200 
125 
IOO 

80 

So 


SO 
75 
90 
00 
60 
So 
40 

2S 


300 
400 
400 
500 
500 
400 
300 

200 


200 
250 
300 
350 
350 
275 
2OO 
IOO 


2, 
2, 

3t 

3, 
3, 

2, 

2, 
2, 


500 

667 

222 
4 20 
230 

500 
625 
350 


a 
3 

3 
4 
4 
4 
4 
3 


,250 

,000 

,250 

,000 

,000 
,000 

,000 

,000 


6,250 
6,000 
7,500 
7,500 
7,500 
6,250 
6,250 
6,250 


2,600 
3,ooo 
3,300 
3,Qoo 
3,900 
4,700 
3,400 
3,000 


Lake-Rand 
Rand.-Wash 
Wash.-Mad 
Mad.-Mon 
Mon Adams 


Adams- Jack 
Jack.-Van B. 


Lake-Rand 
Rand.-Wash. 


Market Street, 5241 Feet 


(0.60) 
(0.50) 
(0.40) 
(0.3) 
(0.20) 
jo.isj 
(o.io) 


(100) 
73 
106 
(50) 
(40) 
(40) 
(35) 


<l 

(] 


) 

o) 

t7) 

i 
& 


(ISO) 
(200) 
(250) 
(250) 
(150) 
(125) 
(100) 


(75) 
(100) 
(125) 
(125) 
(75) 
(60) 
(So) 


300 
400 
500 

Soo 
400 
300 
200 


200 
250 
300 

350 
275 
200 

IOO 


2,250 
2,000 
2,60O 
3,400 
3,400 
3,500 
2,500 


3 

4 

1 

5 
4 
3 


,500 

,000 
,000 
,000 
,000 

,250 
,500 


6,000 
7,000 
7,000 
7,000 
6,000 
6,000 
6,000 


2,800 
3,8oo 
3,900 
3,5oo 
3,5oo 
3, ioo 
2,500 


Wash.-Mad 
Mad.-Mon 
Mon .-Adams 
Adams- Jack 
Jack.-Van B 



* East side of street. 

services has mounted more rapidly than the prices of farm products, 
and it is believed that an index based on the current wages of unskilled 
factory labor would be as good if not a better means of correcting the 
current dollar value of Chicago land. Accordingly, Figure 77 shows the 
number of days of unskilled labor required to purchase the site of Chi- 
cago at different periods. Inasmuch as wages of unskilled labor have 
hitherto held a considerable part of the gains made on each violent up- 
swing in the price level and unskilled wages in 1926 stood five times as 



GROWTH OF CHICAGO AND ITS LAND VALUES 347 



high as in 1840, such a method of correcting the aggregate land values 
of the city greatly reduces such values. In fact, even including the 
areas that have registered the greatest increases and not singling out 
the blighted areas, the increase in the number of labor days required 
to purchase the site of Chicago increased but slightly from 1892 to 
1926. 

TABLE XLV 

VALUE OF LAND IN CHICAGO BY PRINCIPAL TYPES OF USES, 1910-33 
(Millions of Dollars) 



Year 


Outlying 
Business 


Loop 


Industrial 


Residential 


Total 


IQIO 


2 CO 


600 


2OO 


^oo 


I ?OO 


>* 
1028 


I 333 


I OOO 


4.OO 


2 267 


5 OOO 


IQ33 . 


3OO 


e;oo 


2OO 


I OOO 


2 OOO 















a) The change in the interest rate. Another factor of the greatest im- 
portance has been the change in the long-term interest and capitaliza- 
tion rates in Chicago. As Figure 78 shows, interest rates on Chicago 
real estate have changed greatly in a century. In 1856 the interest rate 

TABLE XL VI 

INDEX NUMBERS OF CHICAGO LAND VALUES BY PRINCIPAL TYPES OF USES 

(1910=100) 



Year 


Outlying 
Business 


Loop 


Industrial 


Residential 


Total 


IQIO 


IOO 


IOO 


IOO 


IOO 


IOO 


1928 
IQ33 . . 


66 7 
ItJO 


I6 7 
83 


215 
IOO 


453 
200 


353 
143 















on the best mortgages in the central business district was 10 per cent, 
by 1873 it was 8 per cent, and from there it dropped to 5 per cent in 
1 88 1 and to 4 per cent by 1897. From 1873 to 1897 central business 
land values would have doubled even if the income had remained the 
same, because the same income would have been capitalized at half the 
former rate. Accordingly, it has seemed proper to construct a curve of 
land values on the supposition that the 8 per cent rate of 1873 had con- 
tinued to prevail and to show how much change in land values has oc- 



348 



ONE HUNDRED YEARS OF LAND VALUES 



curred independent of the changes in interest rates. This irons out 
much of the rise from 1879 to 1890. 

b) Allowance for the cost of street improvements. A deduction must 
likewise be made from aggregate Chicago land values for the cost of 

THE TREND OF CHICAGO LAND VALUES, POPULATION AND MANUFACTURING 

1835-1933 

MANUFACTURES:I=$5,000,000 
LAND VALUES: |=$5pOO,OOO 
POPULATION' 1= 5,000 




rTTTTTTTTTi 



FIG. 76 

street pavements, sewers, sidewalks, and other improvements, the cost 
of which has been chiefly paid for by special assessments against the 
property affected, if one desires to obtain the net site value of the land. 
The total amount so spent in the entire period of the century has 
amounted to approximately $600,000,000. Current prices of lots in- 
clude all street improvements installed and paid for but are usually sub- 
ject to unpaid assessments. In deducting the cumulative amount of the 



CHICAGO LAND VALUES IN CURRENT DOLLARS AND IN VALUES CORRECTED 
FOR CHANGES IN WHOLESALE PRICES,WAGES AND INTEREST RATES 

1=45,000,000 

I - 5,000.000 DAYS Or UNSKILLED LABOR 







FIG. 77 



THE INTEREST RATE ON IMPROVED REAL ESTATE IN THE 

CENTRAL BUSINESS DISTRICT OF CHICAGO 

COMPARED WITH THE YIELD ON RAIL BONDS 

1633-1933 




II liT 1 i ! ! I I i I ! I 1 1 I 1 1 I 



FIG. 78 



350 



ONE HUNDRED YEARS OF LAND VALUES 



cost of public improvements in Chicago from the time of the earliest 
records from the aggregate land values of each year, there is accordingly 
a slight exaggeration because only parts of the assessments of each of 
the last few years are immediately due and payable. Since this affects 

MILES OF NEW PAVEMENTS CONSTRUCTED ANNUALLY IN CHICAGO 
1855-1932 




YEARS 

FIG. 79 

only the part of the instalments for three or four years, and not for the 
entire period, the error is not great. 

If Chicago land values are corrected for these various factors, it will 
be noted that land values so deflated have failed to keep pace with the 
increase of population. It would appear, therefore, that if inflationary 
elements are eliminated from land values, population growth must not 



GROWTH OF CHICAGO AND ITS LAND VALUES 351 

only continue to sustain rising land values, but it must continue at a 
faster pace than at certain past periods, if a real increase in aggregate 
land values is to be maintained. If the blighted area of declining popu- 
lation be reduced to the number of days of unskilled labor required to 
purchase it, a sharp decline in its labor day value occurred from 1892 
to 1928. 

2. Growth of money at compound interest and rise of land values com- 
pared. A further comparison may now be made between the rate of 
growth of money at compound interest and the rate of increase of Chi- 
cago land values. In Tables XL VII and XLVIII, and in Figure 80, the 
aggregate values of Chicago land at peak and valley periods at different 
dates have been put at compound interest at 6 per cent per annum. It 
will be noted that even the peak land value of 1836 would have amount- 
ed by 1933 to the land value actually prevailing in that year, while later 
peak values would have amounted to much greater sums. In regard to 
such comparisons, two qualifications, however, must be made. The 
first is that such computations could only be fairly applied to vacant 
land, inasmuch as improved land in most cases earns its interest, so that 
any increase in capital value is a net gain. The second observation is 
that it would have been extremely difficult if not impossible to have se- 
lected investments that have yielded a net return of 5 or even 6 per 
cent per annum for the period covered by this study. 

3. Taxation. During the century of the rise of Chicago land values, 
aggregate taxes have been constantly increasing, as Figure 96 shows. 
The actua-lsassessment of taxes prior to 1928 favored outlying vacant 
land at the expense of the Loop and of developed property, so this in- 
crease in the tax rate did not bear so heavily on the sections in which 
land values rose so greatly from 1921 to 1926. 42 The reassessment in 
1928 shifted the burden from the Loop to the outer sections. 43 Taxes 
continued to increase until the Chicago tax levy for school and corpo- 
rate purposes for the eight years ending in 1931 was greater than the en- 
tire tax levy for the ninety-three years before I923. 44 The per capita tax 

42 Herbert D. Simpson, Tax Racket and Tax Reform in Chicago (1930). 

According to investigations made by the writer, the tax bills for most of the Loop were 
lower in 1928 than in 1927, while for nearly all other property they were much higher. 

44 The aggregate Chicago city and school tax levy for the eight years 1924-31, inclusive, 
was $1,061,100,362. The aggregate Chicago city and school tax levy for the eighty-six 
years from 1837 to 1922, inclusive, was $1,020,561,853. As the taxes for the seven years 
1830-36 were insignificant, being only $5,906 in 1837, there can be no doubt but that the 



352 



ONE HUNDRED YEARS OF LAND VALUES 



RATE OF INCREASE OF CHICAGO LAND VALUES, 1830-1933 COMPARED WITH 
THE RATE THE TOTAL LAND VALUES OF EACH PEAK PERIOD 
WOULD HAVE INCREASED AT 52 AND 62 COMPOUND INTEREST 




FIG. 80 



taxes for the ninety- three years from 1830 to 1922, inclusive, were less than for the eight 
years ending in 193 1 . Of course, the growth of the city in area, population, and in the number 
and complexity of its governmental agencies must be taken into account in considering 
the absolute increase in taxes. Moreover, it is important in connection with tax policy to 
note that expenditures on such improvements as school buildings may favorably affect 
real estate values (Report of the Comptroller of the City of Chicago [1931], p. i73> for the 
figures from 1837 to 1930, inclusive; figures for 1931 from unpublished records of the City 
Comptroller's office). 



GROWTH OF CHICAGO AND ITS LAND VALUES 353 

for city and school purposes increased from approximately one dollar 
in 1840 to fifty dollars in 1930, a rise of fifty fold. The Chicago tax levy 
for the year 1930 alone was greater than the corresponding city and 
school levy for the entire period from the founding of the city to the 
first World's Fair. 45 The continuing heavy tax load in 1930, when real 
estate net incomes had sharply declined and when several years' taxes 
had accumulated, was another blow to land speculation. 

E. TREND OF POPULATION AND LAND VALUES BY DISTRICTS 

In considering the trend of aggregate or average Chicago land values, 
there is a danger in overlooking the vast differences in value that exist 
at the same time between different tracts of land within the city. The 
numerous charts and graphs showing land values by types of uses and 
by square-mile sections should have made the reader familiar with these 
land- value variations. In this concluding section of this chapter, space 
prevents the repetition of this mass of detail, and only a broad view of 
the relationship between population shifts of land values within the 
city can be presented. 

i . The centrifugal forces affecting population. The population of Chi- 
cago was at first concentrated near the center of the city and the den- 
sity curve resembled a cone with the sides sloping sharply downward. 46 
As population increased and transportation facilities improved, the 
base of this cone widened and the rate of most rapid population increase 
passed to successive belts of land, each one in turn farther from the 
main business district. 47 After 1870 the height of the population pyra- 
mid rose only slowly but the base widened rapidly. In the twentieth 
century the number of people living within the areas that once con- 
tained the entire city stopped advancing and began to decline. 48 Be- 
tween 1920 and 1930 the remarkable change in the distribution of the 
population of Chicago is made strikingly evident by Figures 82 and 86. 
A large crater has appeared near the heart of the city, and there is no 

The aggregate Chicago city and school taxes from 1837 up to and including 1893 were 
$155,977,669. The Chicago city and school tax for 1930 alone was $168,606,720. Same 
references as in note 44. 

< 6 See Figs. 85 and 86. Population by square-mile areas from 1840 to 1890 based on the 
study by R. G. Callahan based on returns from election precincts. For the periods 1900- 
1920 the figures of the Chicago Surface Lines are used, and for the year 1930 the square- 
mile totals are derived from U.S. Census tracts. 

47 See Fig. 83. < 8 See Fig. 84. 



354 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE XL VII 

THE AMOUNT TO WHICH THE SALES VALUE OF CHICAGO LAND AT DIFFERENT PERIODS 
WOULD HAVE GROWN AT 6 PER CENT COMPOUND INTEREST 
(Thousands of Dollars) 


<f> 

to 

Oi 


CMvOvoOcMOO'-'O TJ-NO O O 

O ^ CO O NO OO Q ONONO VOVOO 
NO OO O VONO M O CM VO tOOO M O 


TfOO CMCOCMOOTJ--3-OVO lOOO O 
^O *$ O OOONONO vo ^ O NO M O 
00 CO M O ONNO COCO M CM IO O 


CM M COCO VONO NO 10 TJ- t^ 
M M M 
9= 


CM 


I 


o NO" S S> R 5 [o % vo 8 o 


; 


CO M CONO NO OO CO vooo OO O 


H t^CM CM COO ^COCM VO ; 


o\ 


OOO^OOO^OCOOOO 


vO T-OOO t^ c^ to t^*. MQO 

M ^ r^* 10 ^*o ^ooo o^ O 




CS tH Tf M ^" H M 


8 

C* 

H 


cs <N CO O O O\ O ^ O ... 
100 ^O ^t* M r^- o *>- O 

^- ^}- 10 M CS OO ^O OO O ... 


M ^~ w OO t*^ O s O ... 

M CS M <N M 


1 


SS^8o8S88::::: 


CM O CO t*** vo vo 


o> 

00 

H 


O^voOOMO 
CO O M t^NO vo O 

t^ VOOO ^J" CM Tj- O 


CMCMCMt^-MMO 






K 


<O 

t^. 

00 


OcovoOCMO 
Q\ rj- O NO t^ O 


M M Q>NO O VO 




^ ^ M ^ :::::: 




M 
NO 

00 


^ONOOO 

OONPCN?8 : '------ 




M 


NO 
00 


OOtHioO 

oit^ioO 








<N CO VO 
co CS 

M 

^ 


1 


g" CM O 




CO co -^ 


r^ M 


H 


NO 

to 

00 


CM O 


o 


Original 
Amount 


o8888 


2M ^S >> 


H H M CM VO CM 
/^ 


S 














COOOOOOOCOCOCOOO ONONONONON 



GROWTH OF CHICAGO AND ITS LAND VALUES 



355 



longer any population cone, for as one goes northward along the lake 
the population density does not show a downward slope. This is dem- 
onstrated again by Figure 84, which shows how the population curve 
drawn through the area extending north and south for a mile east of 
Ashland Avenue had flattened out by 1930. This great shift of popula- 
tion from close proximity to the center of the city to new districts on 
what had once been the outer edges of Chicago was made possible by 
the elevated lines, the automobile, and the telephone, which quickened 
the speed of transportation and communication. The attractions of 

TABLE XLVIII 

THE RISE IN CHICAGO LAND VALUES COMPARED WITH THE GROWTH OF 

LAND VALUES AT 6 PER CENT COMPOUND INTEREST 

(Per Cent of Sales Value at Respective Periods of Original Investment Was Put 
on Compound Interest at 6 Per Cent) 





Original 


























Year 


Amount 


1836 


1841 


1856 


1861 


1873 


1879 


1892 


1900 


1910 


1920 


1926 


1933 




(Thousands) 


























1830 


$ 160 


2.27 


21 .7 


0.58 


1-7 


0.34 


I.I 


0.32 


0.94 


1 .1 


i-5 


0.86 


3.2 


1836 


10,000 


IOO.O 


947.O 


24.8 


70.0 


14.0 


4 8.8 


17.4 


41.6 


S3 -3 


66.7 


38.0 


142.4 


1841 


i ,400 




IOO.O 


2-7 


7-5 




5 - 1 




4.4 


5-2 


3-9 


4.0 


IS- 


1856 


125,000 






IOO.O 


280.0 


58.5 


191 .0 


67.9 


162.3 


190.0 


260.0 


148.0 


555- 


1861 


60,000 








IOO.O 


21. 


68.5 


24.4 


58-2 


74-4 


93-3 


53-0 


199. 


1873 
1879 


575,000 
250,000 










IOO.O 


388.6 

IOO.O 


116.0 
35-6 


277-3 

120.6 


355-0 
154-0 


313-5 
136.2 


252.3 
77-3 


948. 
283- 


















IOO.O 


239 .0 


305.0 


383 .0 


217.5 


817.' 




















IOO.O 


128. 


160.4 


90.6 


342. 






















IOO.O 


IOO.O 


7 6 7 


255. 
























IOO.O 


S6-7 


213-3 


























IOO.O 


375-9 


1033 


2,000,000 
























IOO.O 

























modern buildings and of motion-picture places, banks, and chain stores 
in these newly settled communities were the centrifugal forces that 
whirled people from their old abodes into the new bright-light areas. 
In their wake, between the Loop and the new sections were left the 
"blighted areas." 

The difference in land values between these old and new areas is not 
measured by the number of people alone, for the races, nationalities, 
and classes dwelling in these "blighted areas" are the lowest in the so- 
cial and economic scale. As people are not concentrated in large tene- 
ments in these poor areas, but are thinly spread over these districts in 
single-family dwellings or small apartment buildings, their low indi- 
vidual purchasing power is not overcome by their aggregate mass. Con- 
sequently, a low level of rents and a high percentage of loss in collecting 



356 



ONE HUNDRED YEARS OF LAND VALUES 



that small amount, a heavy rate of physical deterioration of property 
caused by waste, neglect, and acts of vandalism, reduce land values in 
these sections occupied by "hobos," seasonal workers, and criminals of 

POPULATION GROWTH OF CHICAGO BY TWO MILE ZONES 

DISTANCE FROM STATE AND MADISON STREETS 
I =ZONE 0-2 MILES 
H =ZONE 2-4 MILES 

S= ZONE 4-6 MILES 
= ZONE 6-8 MILES 
3C = ZONE 8- 10 MILES 

I = 1000 POPULATION 




FIG. 81 

native American stock and by the lowest classes of Mexicans, negroes, 
and South Italians to a very low point. 49 There is now a valley in the 
land- value curve between the Loop and the outer residential areas that 
indicates the location of these sections where the buildings are mostly 

See Fig. 86. 



I 3t 



CENSUS TRACTS 

OF- 

CHICAGO 



GROUPED INTO 113 AREAS 

SHOWING INCREASE OR 
DECREASE OF POPULATION 

I9ZOTOI930 




400-SM 

S8S8 

000 1999 

ovr.f? zoao 



FIG. 82. Area inclosed by broad black band is the territory in which the population 
declined from 1920 to 1930. 



358 



ONE HUNDRED YEARS OF LAND VALUES 



over forty years old 50 and where the residents rank lowest in rent-paying 
ability and highest in criminal activity. 51 



POPULATION PER SQUARE MILE v 
IN SECTION FROM ASHLAND TO HALSTED 
FROM FULLERTON TO PERSHING ROAD 

WOO, IS5 TOI88 




FIG. 83 

2. The effect of population changes on the land-value pattern. The re- 
markable change in the population pattern of the city between 1920 

s From a large map in the office of the Chicago Plan Commission showing the age of 
every building in the area from Belmont to Sixty- third Street and from the lake to Kedzie 
Avenue. This study was based on the Sanborn insurance atlases. 

s* Clifford R. Shaw, Delinquency Areas (Chicago: University of Chicago Press, 1929). 



POPULATION PER SQUARE MILE IN SECTIONS FROM ASHLAND TO HALSTED 

FROM TOUHY ON NORTH TO 127 QN SOUTH 

1890,1910,1930 



me secr/OM reo* HALSTCO 




1 1 S 1 1 1 1 H ! 1 1 ! ! 1 1 1 

JillSoSSsssSixSsiJS 
FIG. 84 



RESIDENTIAL LAND VALUES 

ONE BLOCK EAST OF ASHLAND AVENUE FROM HOWARD STREET ON NORTH TO127 STREET ON SOUTH 
1910 AND 1928 




I S 

'B & 



! ! 

S 5 



i II 1 11 

*o <o "> <o *o *o 

^ 5 ^ 5 2' * 



1 1 I 



* S 



FIG. 



3 6 



ONE HUNDRED YEARS OF LAND VALUES 



and 1930 was matched by the land- value pattern. 53 Land values for 
many decades formed a pyramid which had its apex over the business 

POPULATION DENSITY PER SQUARE MILE FOR A ZONE OF LAND 
EXTENDING ALONG THE LAKE FROM THE NORTHERN 

TO THE SOUTHERN LIMITS OF CHICAGO 
BY TEN YEAR PERIODS FROM 1840-1930 



1840 



1850 



I860 



1870 



1880 



1890 




FIG. 86 



center, and which sloped sharply downward away from the principal 
shops and stores. This land- value pyramid during the nineteenth cen- 
tury was skewed toward the south to reflect the greater development of 
s See Fig. 87. 



GROWTH OF CHICAGO AND ITS LAND VALUES 



361 



that side of the city, but since 1900 it has become skewed to a far great- 
er degree toward the north. Even more startling than the shift from 
south to north was the raising of a great plateau northward to cor- 
respond with that of population, and the disappearance of the pyramid 
pattern of land values. 53 The uplifting of land values in the outlying 
sections until they were equal to or greater than the values of sections 
near the Loop was the consequence of the rise in land values of the 

LAND VALUES PER ACRE FOR A ZONE OF LAND EXTENDING ALONG THE LAKE 
FROM THE NORTHERN TO THE SOUTHERN LIMITS OF CHICAGO 

1836-1926 1928 




FlG. 87 

"outer city" or the area north of Belmont Avenue, west of Kedzie 
Avenue, and south of Thirty-ninth Street at a much more rapid rate 
than that of the "inner city." 54 

3. The difficulty of developing new areas compared with the difficulty of 
reclaiming li blighted areas" The change in the pattern of the distribu- 

53 Land values for the area extending north and south along the lake shore omitting the 
Loop. From Kinzie Street to Roosevelt Road, the area west of the south branch of the 
Chicago River to Halsted Street was taken. Loop land values were omitted because they 
bear no relationship to the population residing in the Loop, and because they are too great 
in magnitude to be shown on the same scale in the later years. Loop land values would rise 
like a flagpole in the center of each of the pyramids in Fig. 87. 

54 See Figs. 88 and 89; also Fig. 45 on p. 263. 



362 



ONE HUNDRED YEARS OF LAND VALUES 



tion of population and of land values within Chicago during the last 
few decades indicates that the friction imposed by transportation to an 
expanding population was less than that of obsolete improvements and 
diversified ownership. There being no physical barriers to the expan- 
sion of Chicago save that imposed by the lake on the east, it was easier 

CHICAGO LAND VALUES, 1830-1933 

INNER CITY.BOUNDED BY ; BELMONT AVE..LAKE MICHIGAN. PERSHING RD.. KEDZIE Mtloursax ncune) 
OUTER CITY. ALL TERRITORY EXCEPTING "INNER CITY" WITHIN THE CITY LIMITS Or 1933 
ENTIRE CITY, ALL TERRITORY WITHIN THE CITY LIMITS OF 1933 
I = $50,000 




1 



FIG. 88 



in most cases to build new communities on tracts of virgin prairie by 
electric elevated or surface lines, or by automobile or by electrified rail- 
road, than it was to remake an old settled area and to give it a new 
character. That a renaissance of old areas is not impossible, however, 
is indicated by the transformation of the near North Side after 1920, 
but there the creation of a new double-decked street, which became the 
busiest auto highway in Chicago, the proximity of this section not only 
to the Loop but to the lake shore and the Lake Shore Drive, combined 
to give this area advantages which most other old sections did not pos- 



GROWTH OF CHICAGO AND ITS LAND VALUES 363 

sess. The once fashionable area of the near South Side near the lake 
shore may be redeemed, for the strip of land east of Cottage Grove 
Avenue from Twenty-second Street to Thirty-ninth Street has many 
advantages, with both the lake and the Illinois Central suburban trans- 
onic AGO LAND VALUES. 1830-1933 

LOOP BOUNDARIES CHICAGO RIVER LAKE MICHIGAN VAN BUREN ST .WELLS ST 
INNER CITY -TERRITORY SURROUNDING THE LOOP AND BOUNDED BY: 
BELMONT AVE.LAKE MICHIGAN. PERSHING ROAD. KEDZIE AVE. 

OUTER CITY- ALL TERRITORY SURROUNDING "INNER CITY", WITHIN THE CITY LIMITS OF 1933 
ENTIRE CITY-ALL TERRITORY WITHIN THE CITY LIMITS OF 1933 




FIG. 89 

portation close at hand. There are large sections near the packing 
plants on the South Side, west of Wells Street on the North Side, and 
south of Harrison Street on the near West Side that seem to offer few 
attractions for residential development, unless reclamation of the 
blighted areas is to be attempted on a grand scale. In the early twenti- 
eth century, when wholesale houses and manufacturing plants were ex- 
panding in the vicinity of the Loop, it seemed possible that much of this 
area would be absorbed for industrial uses, but in view of the tendency 



364 ONE HUNDRED YEARS OF LAND VALUES 

of factories to move farther out to locations along belt lines, it now 
seems to be the consensus of opinion that most of this low-grade resi- 
dential area has little chance of being converted into a higher- value in- 
dustrial use. 55 

4. The effect of shifting land uses. The land values in different sec- 
tions of the city have followed several different trends. The areas de- 
veloped for workingmen's homes that were close to the central business 
district later acquired a high land value as sites for banks, office build- 
ings, warehouses, or factories. The cheap residential sites that were a 
little farther away, as at Bridgeport or that were on Grand Avenue 
west of Halsted Street, never acquired any higher value except in a few 
cases. Land values in those old areas have tended to flatten out since 
i8go. s6 This tendency became pronounced when the Loop began to ex- 
pand vertically rather than laterally. On the other hand, there are 
fashionable districts like those in the near North Side, which after a 
period of brilliance as sites for mansions decline into boarding-house 
areas, and then, because of the natural advantages which originally 
favored them, make a "come-back" as sites for tall apartment build- 
ings. Other once-fashionable areas such as those on Prairie Avenue or 
on Ashland Boulevard partially regain their former values when they 
become partially occupied with industrial or commercial buildings, but 
they never attain their former land-value peaks. Finally, there are 
newly developed areas on the outskirts of the city, which remained al- 
most entirely vacant until the last few decades, but whose values rose 
in each succeeding land boom, until they reached their apex for all time 
prior to ig2g. 57 From the foregoing discussion, it becomes evident that 
it is difficult to assert that the land- value cycle of a given section fol- 
lows a definite pattern. In general, a section that becomes rilled with 
cottages or bungalows has reached the "ceiling" or limit of its develop- 
ment, as it is easier to move to a new, unoccupied area than it is to 
wreck the existing structures. Land values in such a section will tend 
to decline as the buildings grow older and the original community mi- 
grates or is replaced by a lower economic or social class. Areas in spe- 
cially advantageous locations such as along the lake shore, however, 

ss Clifford Bechtel, chairman of the Committee of the Chicago Real Estate Board, work- 
ing on the problem of the blighted area, has expressed this opinion in public addresses. 
6 See Fig. 59 on p. 318. 
57 See Fig. 54 on p. 306. 



GROWTH OF CHICAGO AND ITS LAND VALUES 365 

that were first developed as home sections later acquired high land val- 
ues as sites for kitchenette-apartment buildings. 

5. Speculative exaggeration of possible demand for certain types of uses. 
In each successive land boom there is a speculative exaggeration of 
the trend of the period, until an inevitable reaction follows. In 1836 
there was over speculation in land fronting on rivers and lakes; in 1856 
excessive emphasis was placed on lots for cheap homes; in 1873 there 
was an inflation in the amount and the ground values of land suitable 
for mansions and suburban residences; in 1890 wild-cat speculation 
prevailed in projected manufacturing townsites or in lots along pro- 
posed elevated routes or near the World's Fair; and in the boom prior 
to 1929 there was an unprecedented rise in the values of apartment- 
building land and of outlying business sites. The movement of popula- 
tion outward from the center of the city produced even greater changes 
in speculative land values than the situation warranted, so that even 
if the migration of people toward the suburbs continues in the future, 
it can hardly exceed the expectations of 1926. On the other hand, the 
proposals to reclaim the blighted areas set up the prospect of a possible 
reversal of the movement away from the center in favor of living within 
walking distance of the Loop. 

6. The future trend of population and land values. The future popu- 
lation and land- value patterns of Chicago depend upon a sequence of 
factors. If the population of the entire United States, with immigration 
curtailed and birth-control practices on the increase, reaches a static 
equilibrium of 155,000,000 by 1955 and then begins to decline, as Pro- 
fessor William F. Ogburn suggests, 58 the rate of growth of Chicago in 
the nineteenth and early twentieth centuries which was supported by 
heavy immigration from abroad as well as by the natural increase of the 
resident population can hardly be maintained. If the proportion of 
people dwelling in cities diminishes instead of increasing as it has in the 
past century, the possibilities for the further rapid growth of Chicago 
will likewise be limited. It will finally also be a question of what pro- 
portion of all the urban residents in the United States the industries 
located in Chicago can attract and support in competition with the 
producing concerns in other cities. In the past century Chicago, by its 
favorable situation, has been able to attract industries that could draw 
to the city and support a rapidly growing population that increased 

s 8 Lecture delivered at the University of Chicago in 1933. 



366 ONE HUNDRED YEARS OF LAND VALUES 

faster than the urban population of the nation as a whole, which in 
turn was increasing much faster than the number of people in the entire 
United States, which aggregate population in turn was growing faster 
than that of most of the older countries of Europe. From 1830 to 1930 
the growth of Chicago was helped by the strong current of population 
increase for the United States and for American industrial and trading 
cities, but if this current slackens or reverses itself, it is hard to believe 
that Chicago will make as rapid progress against this current as it did 
with it. This is of course to a large extent speculative. 

Moreover, if a changed national policy should open the doors to 
another tide of European immigration, and if the demand for increas- 
ing manpower to defend the nation from foreign aggression, added to 
the condemnation of birth control by some of the churches, leads again 
to the rearing of large families, then the population of the United States 
may continue to grow until it reaches a total of 200,000,000 or more. 
Again, it is possible that, without any such rate of increase in the 
number of people in the country, sensational gains in the amount of 
crops harvested per acre may reduce still further the number of persons 
required to till the soil, and will enable an even greater proportion of the 
population to live in the cities. Chicago itself may continue its remark- 
able growth, even if other urban centers decline. New and startling 
inventions such as occurred during the first hundred years of Chicago's 
development may continue during the second century of its history, 
and these may bring about in the Chicago region the greatest concentra- 
tion of people the world has ever known. Finally, the shift in emphasis 
from heavy manufacturing industry to trade, finance, and professional 
service may well redound to the advantage of Chicago, whose location 
as a site for a trading and financial metropolis is unsurpassed. 

If the aggregate population of Chicago be determined as a result of 
the foregoing factors, the distribution of that population within the 
city's metropolitan area will depend upon the strength of the desire to 
liVe in the suburbs or in new neighborhoods far from the Loop, com- 
pared to the intensity of the demand for residences in apartments near 
the business center in reclaimed blighted areas. The effect of the popu- 
lation distribution upon land values will likewise depend upon whether 
people prefer to live in small homes or in large apartment buildings, 
which will depend in turn upon the size of the average family and upon 
social habits and customs. The effect of the population upon land 



GROWTH OF CHICAGO AND ITS LAND VALUES 367 

values will likewise depend upon the distribution of purchasing power 
between the members of that population and the proportion of their 
income that is available for rent. While an expanding population is 
compelled to pay for the added quarters, rents high enough at the out- 
set to pay operating expenses, and a normal return on building costs, a 
stationary or declining population might not find it necessary to main- 
tain such charges on existing buildings. Rents might then be deter- 
mined as they are in depression periods by the amount of money avail- 
able for rent payments after food requirements were met. 

Land values will likewise be affected in the future by the aggregate 
amount of the tax burden and by the proportion of it that is levied on 
real estate and by the rate of interest on real estate mortgages and the 
rate for capitalizing net rents. Such factors will affect the long-run 
trend of land values as measured in dollars of constant purchasing 
power. 

It is obvious from the preceding discussion, however, that land values 
in terms of market prices rise far above the capitalized long-term net- 
income value in a boom and fall below it in a depression. A land-value 
forecaster would have to determine not only the future trends of popu- 
lation, rents, operating expenses, taxes, and capitalization rates, but he 
would have to estimate to what extent these movements will be ex- 
aggerated by speculative manias or be underrated in the period when 
foreclosures of trust deeds are at their peak. Finally, an estimate must 
be made for changes in the purchasing power of the dollar, particularly 
when rapid changes in the gold value of the dollar are imminent. 

In view of the complex nature of the foregoing factors, and the al- 
most unlimited number of combinations of ways in which they could 
interact upon each other, it would be foolhardy, indeed, to predict the 
future aggregate trend of Chicago land values. If, as asserted by stu- 
dents of the population problem, 59 the trends of growth of the past cen- 
tury are not likely to be repeated, then it seems probable that the land- 
value curve of Chicago of the past century will not be duplicated. 

R. K. Whelpton, American Journal of Sociology, May, 1933, pp. 825-34. 



CHAPTER VII 
THE CHICAGO REAL ESTATE CYCLE 

A. THE TIDE OF POPULATION 

The causes of land booms in American urban sites in the past cen- 
tury could usually be traced to factors which led speculators to expect 
an extraordinary increase in the population of the locality within a rela- 
tively short time, or the expectation of its development for commercial 
and industrial purposes. The anticipated population growth was itself 
due to deep-seated forces, operating over the entire area of Western 
industrial civilization. There was a rapid growth of the population of 
all of the leading nations of Europe and America by natural increase 
that was made possible by the new machine technique and the opening 
of new continents to settlement. In addition, there was a great west- 
ward migration of people from Europe to America, and from the eastern 
to the western part of the United States. The individual components of 
this human tide were attracted by the lure of cheap land and were car- 
ried to these hitherto sparsely settled regions by the new steam trans- 
portation. This great population stream, consisting largely of young 
people with high potential powers of natural increase, spread out over 
the land or collected in pools at certain strategic spots as it flowed west- 
ward. The number of persons which any one town site could attract 
from this current of people and hold for itself depended upon its natural 
advantages for trade, commerce, and manufactures. Therefore the par- 
ticular factors contributing to the mercantile, financial, and industrial 
growth of Chicago that were described in the first five chapters of this 
work are of fundamental importance in explaining why so many people 
settled there. So necessary to the population growth of an urban cen- 
ter is the growth of its factories, transportation lines, banks, wholesale 
houses, and stores, which in turn depend upon the extent of its trading 
hinterland and its advantages for manufacturing plants, that land 
speculators seldom fail to stress these factors in describing the possi- 
bilities of further growth and the rise of land values of any city. 

The expectations of the population growth of American townsites in 
the nineteenth and early twentieth centuries were thus partly based on 

368 



THE CHICAGO REAL ESTATE CYCLE 369 

a great actual movement of people and the rapid growth of the cities in 
the territories first occupied. During periods of optimism throughout 
the United States, as in 1836 and in 1925 and 1926, or in particular sec- 
tions of the nation as in the North following the Civil War or in the 
Middle West in the fifties and late eighties, the possibility of population 
growth was magnified to undue proportions. More townsites were laid 
out in Illinois in 1836 than could be filled even by the present popula- 
tion, and within the vicinity of Chicago itself more lots were subdivided 
in each successive boom than were needed for several generations to 
come. 

Therefore, there is no exact relationship between the increase in the 
number of people at an urban site and the increase of land values, be- 
cause speculative influences may magnify the expected future increase 
beyond all reasonable possibilities. Nevertheless, land booms in Chi- 
cago have generally been sustained and carried to their peaks partly 
by a sudden and extraordinary rate of increase in actual population 
growth which persisted for a few years, 1 helped to foment speculative 
excitement, and led to even more extravagant hopes for future popu- 
lation increase. This increase in the rate of population growth was one 
of the factors that led to an increase in rents, building activity, and 
subdivision activity, each of which in turn was carried to speculative 
excess, and each of which interacted upon the other and upon land 
values to generate and maintain the boom psychology. There is thus 
a chain of events communicating with each other which quickened or 
retarded the pace of all the activities connected with real estate. The 
description of the sequence of certain of these phenomena, which can 
be measured, is one of the best ways of defining the Chicago real estate 
cycle. In the following account it must be constantly borne in mind 
that the definite quantitative factors are but symbols of the broad range 
of forces discussed in detail in Part I. 

B. DEFINITION OF THE CHICAGO REAL ESTATE CYCLE 

The Chicago real estate cycle is a term used here to describe the com- 
posite effect of the cyclical movements of a series of forces that are to 
a certain degree independent and yet which communicate impulses to 
each other in a time sequence, so that when the initial or primary factor 
appears it tends to set the others in motion in a definite order. Accord- 

1 See Figs. 90 and 91. 




! I 3 I I 2 i is I 





CIT0I 




g 1 I 



o o 



POPULATION AND RESIDENTIAL LAND VALUES IN 

VARIOUS SECTIONS OF CHICAGO 

1900-1933 



AREA BOUNDARIES: DEVON, KEDZIE, 

IRVING PARK, CRAWFORD 
1=7.500 POPULATION $3.750.000 LAND VALUE 



AREA BOUNDARIES: DEVON, LAKE MICHIGAN. 

IRVING PARK, ASHLAND 

= 12,500 POPULATION $12,500,000 LAND VALUE 





[900 1905 1910 1915 1920 1925 1930 1935 1900 1905 1910 1915 1920 1925 1930 1935 



AREA BOUNDARIES: 79. COTTAGE GROVE, 

87, STATE 
1= 2,000 POPULATION $2,000,000 LAND VALUE 



AREA BOUNDARIES '63, YATES, 

79. STONEY ISLAND 
7,500 POPULATION $7,500,000 LAND VALUE 




1905 1910 1915 1920 1925 1930 1935 



FIG. 91 



372 ONE HUNDRED YEARS OF LAND VALUES 

ing to the view here presented, these cycles in the order in which they 
appear are the cycles of population growth, of the rent levels and oper- 
ating costs of existing buildings, of new construction, of land values, 
and of subdivision activity. The data are available for measuring the 
amplitude of the fluctuations and the time periodicity for all of these 
factors in Chicago for the period from 1830 to 1933, except for the an- 
nual volume of new construction for the period prior to 1854 and for 
rents and the costs of operating buildings before 1900. Accordingly, 
these local phenomena will be measured to ascertain the range of their 
fluctuations, the time intervals between peaks and valleys, and their 
time sequence with reference to each other. After the local cycle in 
Chicago has been thus denned, it will be compared with certain indices 
of a general national character. The forces of the Chicago real estate 
cycle are but local variants of broader forces operating throughout the 
United States, and it is necessary to keep in mind that the Chicago real 
estate cycle is affected by general business conditions, commodity 
price levels, value of money, and population movements within the 
United States as well as by peculiarly local conditions. 

A cycle is frequently used to describe a wavelike movement of some 
factor from the trough to the crest and back to the trough again or from 
one crest to the next crest. Each set of phenomena by its own action de- 
fines its cycle, for the amplitude of the fluctuations of different econom- 
ic and social forces above and below their normal trend line and the in- 
terval between waves vary to a marked degree. It may be difficult to 
define a cycle in the case of those economic activities that trace short 
and choppy waves or waves of irregular amplitude, but the five major 
cycles of Chicago real estate, which were like tidal waves in magnitude, 
have registered their effect in striking fashion. All five movements, 
Figure 90 shows, were characterized on their upswing by rapid increases 
in population, feverish building operations, and a hectic land boom in 
which land values increased from twofold to tenfold in a few years and 
on their downswing by widespread declines in rents and foreclosures on 
a large scale which reduced land values 50 per cent or more from the 
peak levels and which brought building operations almost to a stand- 
still. 

C. THE EFFECT OF POPULATION GROWTH ON THE CHICAGO 
REAL ESTATE CYCLE 

The explanation of the exceptional spurt in real estate activity that 
is followed by almost complete stagnation is to be found in the forces 



THE CHICAGO REAL ESTATE CYCLE 



373 



which cause alternately an acceleration and a slackening in the demand 
for land and buildings. One of the important factors is the change in 
the rate of population growth. A stationary population would require 
no additional houses or stores except those needed to replace obsolete 
or depreciated structures or those destroyed by fire, earthquake, or 
tornado, or except as changing habits and customs or new inventions 
gave rise to new types of buildings such as garages. A population in- 
creasing at a constant rate with constant per capita residential require- 
ments could keep a building force employed with a fair degree of regu- 

TABLE XLIX 

PERCENTAGE OF INCREASE IN THE POPULATION OF CHICAGO FOR 
EQUAL TIME INTERVALS IN BOOMS AND DEPRESSIONS 



No. Years 


On the 
Upswing 


No. Years 


On the 
Downswing 


2, 1833-31;. . 


033 


2, 183730. . . 


0.7 


2. 18^2^4 


7O 






2, 18^4^6. 


28 


2 l8t?7 tJQ 


2 


3, 1864-67 
3, 186770 


37 
36 


3, 187376. . 


7 


2 187073 


27 






3, 1888-01. . 


24 


3, 1804. 07 


ii 


6, IQIQ 2< . . 


26 


6, 102733. 


No increase* 











* According to computations by the writer on the basis of grade-school enrolment. Other 
estimates, such as by the Chicago Association of Commerce, show an increase in population in 
this period. 

larity in erecting new housing facilities, and the rate of land absorption 
could be so calculated in advance that the value of potential building 
sites would increase at the regular rate of a compound-interest table as 
the time grew near for their utilization. 

In the case of Chicago, however, there were sudden changes in popu- 
lation growth that accompanied sudden changes in land values. As 
Table XLIX shows, the population of Chicago has not increased at an 
even annual rate. 

i . The initial impulse a sudden spurt in population growth. During 
the early stages in a revival in general business conditions, exceptional 
economic opportunities attracted a tide of people to Chicago. Some- 
times a barrier has dammed up this flow of human beings, so that it has 
come in a rushing flood. Thus the Black Hawk War of 1832 kept back 



374 ONE HUNDRED YEARS OF LAND VALUES 

the early settlers, but within a year after the removal of that menace 
the population of Chicago increased from 200 to 2,000. Again the lack 
of direct rail connections with the East diverted part of the west-bound 
migration from Chicago, but within three years, from 1852 to 1855, the 
population of Chicago had increased from 39,000 to 80,000. The panic 
of 1857 momentarily checked the population flow, but the industrial 
expansion of the city during and after the Civil War caused the number 
of its inhabitants to increase from 120,000 to 380,000 between 1861 and 
1873. The panic of 1873 caused a slackening in the rate of increase, but 
in the decade from 1880 to 1890 the opportunities for employment in 
Chicago factories and on the expanding railway system enabled the 
population within the present city limits to grow from 550,000 to i,- 
100,000. Finally, after several decades of steady population growth, 
the outbreak of the World War, calling for enlistment of able-bodied 
young men in the army and navy, held back the increase of population 
for a time. The return of the soldiers and sailors to their homes and the 
migration from the rural centers in response to the industrial attrac- 
tions of Chicago caused its population to increase from 2,500,000 to 
3,400,000 between 1918 and 1927. In each of these five major cycles 
the sudden increase in population preceded the rapid upturn in new 
construction and in land values. 2 

2. The supply of houses cannot be immediately increased. The new 
arrivals in Chicago in these periods required housing facilities. They 
could not ship their old homes to their new abode as they could trans- 
port food and furniture. A mere shift in population from one place to 
another therefore increases the aggregate demand for new residential 
buildings, because the vacant space left behind cannot be transferred 
to the city to which the people are flocking. 3 This unexpected need for 
more dwelling units cannot be supplied at once, as the time required to 
select a building site, to examine the title to the ground, to draw plans 
for the structure, to arrange for financing, to order the materials, and 
to perform the work of construction from foundation to roof would 
amount to from six months to a year. As the work must be done out of 
doors, the loss of time in winter months and on rainy days further 

2 See Fig. 90. 

3 It is true that this increase in the local demand for housing in the localities attracting 
population is counterbalanced by a falling-off in the demand in the places of origin. Since 
the vacant space left behind cannot be transferred, there is a net increase in demand for 
new buildings caused by the shift. 



THE CHICAGO REAL ESTATE CYCLE 375 

lengthens the process. Thus this sudden increase in the number of 
people in Chicago, which was greater than anticipated by local build- 
ers and for which they were not prepared, put a premium upon quarters 
that happened to be in existence at the time. As people crowd into all 
the available space, vacancies virtually disappear and the rents of old 
buildings rise. The newcomers have to live on the spot in order to 
share the economic opportunities, and they have either accumulated 
funds or present employment that affords them the means to pay higher 
rents. 

3. Qualifications as to the influence of population on the real estate 
cycle. The effect of population growth on land values must not be 
overemphasized, however. A spurt in the rate of population increase 
does not of itself always cause a land boom, on the one hand, nor does 
the lack of such a sudden growth in the number of people in a city pre- 
vent a rapid rise in land values. Thus, according to available popula- 
tion data, there was a marked increase in the rate of population growth 
of Chicago in 1845, 1862, 1897, 1898, 1909, and 1910 without any ex- 
ceptional rise in land values. On the other hand, while there was a 
steady growth of the population of the city prior to the land booms cul- 
minating in 1873 and in 1892, there was no exceptional flood of people 
entering the city in any one year. 4 

The effect of population growth upon land values depends partly 
upon the condition of real estate and of general business at the particu- 
lar time. Speculators may anticipate a growth of population that has 
not yet taken place, or after population has increased rapidly for a 
number of years they may suddenly awake to the realization of what 
has occurred. If a manufacturing concern announces that it will erect 
a large plant in some sparsely settled region, there will often be a land 
boom before any of the expected workers arrive on the scene. Con- 
versely, a large number of people entering the city during a depression 
when there is a large supply of vacant houses and when the resident 
population is painfully aware of the collapse of the last land boom will 
not have the same apparent effect upon rents and land values as in an 
influx of people coming in a period of expanding business and of general 
optimism. The coming of these people into the city at such times may, 
however, prevent rents and land values from falling still further. 

Not only is there no exact relationship between the population 

< See Table XCIII in Appendix III. 



376 ONE HUNDRED YEARS OF LAND VALUES 

growth of Chicago and the rise in its land values that have been in- 
fluenced by speculative moods, but there is no perfect correlation be- 
tween a mere increase, or lack of increase, in the number of people and 
the gross and net rents that determine the investment value of land 
over long periods of time. For, on the one hand, there may be a rise in 
rents without any sudden increase in the rate of population growth, if 
new construction activities have been suspended for some time. On the 
return of prosperity giving employment to more people at higher wages, 
a population that has "doubled up" may spread out and create a de- 
mand for more residential units. Or as the standard of living rises in 
either short or long periods, a stationary population might vacate old 
or obsolete houses, leaving them empty, and move into new buildings 
with all modern improvements, thereby causing a rise in rents for struc- 
tures of the improved type. The demand for more housing space may 
be caused likewise by a sudden increase in the marriage rate, resulting 
in the establishment of more new households for the time being than 
old households that were dissolved by death or other causes. 

Thus a demand for more building space may spring up from a sta- 
tionary or slowly expanding population, so that a sudden spurt in popu- 
lation growth is not indispensable to a rise in rents. On the other hand, 
a rapid increase in population, if it consists of a class of people with low 
earning power or low standards of living, may not lead to an increase 
either in rents or in speculative values. Immigrants may crowd closely 
together in poor quarters without raising the rent level of their own 
area, and the influx of negroes into a district in Chicago usually causes 
its property values to decline. 

a) Limitations of the population and land-value data. There is fur- 
ther need for caution in dealing with the relationship of population to 
land values because of the fact that both land- value data and the annual 
figures for population are only approximations at best. The various 
methods of computing the population for intercensus years do not pro- 
duce the same results, and in the past the results obtained in the school 
census varied widely from the United States Census returns. Because of 
the rapid rate of growth of Chicago, more annual census data were taken 
by city, state, and school authorities than in most other communities; 
but the fact that the early population estimates between census years 
were made by different organizations, probably using different methods, 
subject to varying margins of error, prevents their use for purposes re- 



THE CHICAGO REAL ESTATE CYCLE 



377 



quiring superfine accuracy. Accordingly, the figures of annual popula- 
tion have been used in this study only to show broad and striking con- 
clusions that would not be affected materially, even if there was a con- 
siderable margin of error in the figures. 

Finally, even if the annual increments of population could be meas- 
ured exactly, that would merely register the effect of the manufacturing 

TABLE L 

RENTS OF WORKINGMEN'S DWELLINGS AND 

OFFICE BUILDINGS IN CHICAGO 

Relative Numbers (1915 = 100) 



Year 


Office Buildings* 


Dwellings t 


IQIS 
1016 


IOO 
IOI 


IOO.O 
99 9 


1917 
1918 


102 
104 


IOO-7 
IOI .4 


IQIO 


1 08 


108 o 


IQ2O 


126 


i^< i 


1921 
1922 
1923 
1924 
IQ2 ^ 


149 
167 
176 

183 

181 


178.2 
187.4 
192. i 
204.4 
205 6 


IQ26 


1 86 


IQQ ^ 


IQ27 


1 88 


IQ3 


1928 

IO2O 


190 
1 80 


186.8 

180 * 


I (HO. . 


174 


17^ . I 


IQ3I . . 


163 


164.4 


IQ72 




138 8 


IQ33 




108 7 









* Earle Shultz, "What of the Future?" Proceedings of the 24th 
A nnual Convention of the National Association of Building Owners and 
Managers (1931), pp. 523-24. The base was changed by the writer 
from IQIO to 1915. Average rents for ten Chicago Office buildings. 

t U.S. Department of Labor, Retail Prices and Cost of Living (De- 
cember, 1932), p. 16; Monthly Labor Review, XXIX, No. 2 (August, 
1929), p. 20. Figures are for June of each year from 1919 to 1933, in- 
clusive, except for 1921, when the figure is for May. The figures for 
1915-18, inclusive, are averages of figures for December of the year 
preceding and following. 

and commercial opportunities of Chicago that made it possible to sup- 
port that many people on its site. As already pointed out, population 
itself is not a final cause, but a symbol, for a complex combination of 
other forces. 

D. THE SEQUENCE OF EVENTS IN THE CHICAGO REAL ESTATE CYCLE 

With these various qualifications as to the use of annual population 
data, Figure 90 tends to show that the land booms in Chicago were pre- 



378 



ONE HUNDRED YEARS OF LAND VALUES 



ceded by a spurt followed by a slackening in the rate of population 
growth and Table LI presents evidence for the last cycle tending to 
indicate that the increase in this population growth was one of the 
factors leading to a rapid rise in rents. 

i. Gross rents begin to rise rapidly. It will be noted from Table 
XLIV that notwithstanding the rise in commodity prices of 100 per 

TABLE LI 

RATE OF POPULATION INCREASE AND RATE OF INCREASE IN RENTS 

OF OFFICE BUILDINGS AND WORKINGMEN'S DWELLINGS 

IN CHICAGO, 1915-33 



YEAH 


TOTAL 
POPULATION* 


PERCENTAGE INCREASE OVER PRECEDING YEAR 


Population 


Office Rents t 


House Rentst 


IOZ< 


2,448,426 
2,492,204 
2,492,200 
2,546,144 
2,599,502 
2 , 701 , 705 
2,820,992 
2,901,507 
3,010,850 

3,155,843 
3,263,196 
3,296,679 
3,402,296 
3,397,067 
3,372,936 
3,376,438 

3,341,913 
3,236,913 








1016. . 


1.8 

0.0 
2.2 
2. I 
3-9 

4-4 
2.9 
3-8 
4-8 
3-4 
i .0 

3- 2 . 
o.i| 

0.7! 

O. I 

i.ol 

2.9! 


I.O 
I.O 
2.0 

4-o 

16.7 
18.3 

12. I 

5-4 
4-o 

0.0 

i-7 
i . i 
i . i 
S-3J 
3-3l 
6-3l 


O.O 

0.7 
0.7 

6-5 
26.4 

31-9 

4.2 

2-5 
6.4 
0.6 
3-ot 
3-3* 
3-7* 

a-si 

3-3;: 
6.x:: 

rr fit 


1917 . . 


1918. . 


IQIQ 


IQ2O 


IQ2I 


IQ22 . . 


1923. . 


1924 


iQ2<; 


1926 


1927 . 


1928. . 


1929 


1930 


IQ3I 


1932. 


1933 




21. 7t 











* Computed by the writer from the enrolment in the Chicago grade schools, 
t See Table XLIV. J Percentage decrease. 

cent from 1916 to 1919 (see Fig. 100 on p. 412), Chicago office rents had 
advanced but 7 per cent and dwelling rents but 8 per cent in that period. 
It is significant to note that the rents began to advance more rapidly at 
the very time that the rate of population growth increased. 5 

2. Net rents rise even more rapidly. Thus as a result of, or coincident 
with, the rapid increase in the rate of population growth of Chicago 
from 1918 to 1921, gross dwelling and office rents rose sharply. Since 
interest on mortgages is fixed for several years in advance and since the 

s See Table LI. 



THE CHICAGO REAL ESTATE CYCLE 



379 



expenses of operating buildings contain many items that are slow to 
advance, the net income remaining to holders of equities in improved 
real estate increases even faster, as Figures 34 and 35 6 on pages 239 and 
240 and Table LII show. 

Thus while office rents increased 90 per cent from 1918 to 192 6, oper- 
ating expenses rose but 31 per cent, so that net income advanced 300 

TABLE LII* 

GROSS INCOME, TOTAL EXPENSE (INCLUDING TAXES AND DEPRE- 
CIATION), AND NET INCOME OF A CHICAGO 
OFFICE BUILDING, 1918-32 



YEAR 


ABSOLUTE AMOUNTS 


RELATIVE NUMBERS 
1918=100 


Gross 
Income 


Operating 
Expenses, 
Taxes, and 
Depreciation 


Net 
Income 


Gross 
Income 


Operating 
Expenses 


Net 
Income 


1918 
IQIQ . . 


$387,375 
390,446 
410,803 
478,206 
529,818 
609 , 840 
627,126 
688,082 
734,234 
754,655 
764,022 

757,400 
728,656 
675,218 
5 6 4,504 


$304,075 
289,848 
322,062 
356,559 
365,724 
392,123 
386,435 
400,505 
399,699 
474,455 
448,822 
417,418 
426,394 
422,976 
482 , 700 


$ 83,299 
100,598 
88,740 
121,647 
164,093 

217,817 
240,691 

287,577 
334,535 
280,211 

3 J 5,i99 
339,982 
302,262 
252,243 
81,804 


IOO 
IOI 

106 

123 
137 
157 
162 
I 7 8 
189 

195 
197 

195 
190 

174 
I 4 6 


IOO 

95 
106 
117 

120 
129 
127 
132 
131 
156 
148 

137 
140 

139 
159 


IOO 
121 
107 
I 4 6 
197 
261 
289 

345 
402 

336 
378 
408 
364 
328 
98 


IO2O 


1921 
IO22 


I9 2 3 
1924 
1925 
1926 


1927 
IQ28 


IQ2Q 


1930 
1931 

IQ32 . . 





* John P. Hooker, "Financial History of a Chicago Property," Journal of the American Institute of Real 
Estate Appraisers, July, 1933, p. 347. Relative numbers computed by the writer. 

per cent. The same situation prevailed in apartment buildings, even of 
the a walk-up" variety, because expenses for heat, janitor service, deco- 
rating, etc., which form a considerable proposition of the gross rent, do 
not rise as fast as the increase in rents, as Figure 92 shows. In the case of 
kitchenette-apartment buildings, where charges for elevator service, the 
use of furniture and linen, free gas and electricity, and maid service are 
included in the gross rent, the increase in net incomes was even greater 
than in the case of the ordinary unfurnished-apartment buildings. 
6 See above, p. 239-40. 



THE RELATION BETWEEN INCREASE IN RENTS PER ROOM AND INCREASE 
IN OPERATING EXPENSES IN STEAM HEATED APARTMENTS 
CHICAGO -1933 



245 
240 



228 



FIGURES AT TOP OF BARS INDICATE MONTHLY RENTAL PER ROOM 




FIG. 92 



THE CHICAGO REAL ESTATE CYCLE 381 

3. As a result of the rise in rents, setting prices of existing buildings ad- 
vance sharply. The great bulge in the profits to be derived from the 
ownership of old buildings would naturally cause their selling price to 
advance unless there was a prospect for the curtailment of this gain by 
the supply of new buildings which contractors would hasten to con- 
struct to take advantage of this opportunity. It so happened, however, 
that prior to the Chicago land booms culminating in 1836, 1856, 1873, 
and 1926 there had been a rise in wholesale prices in the United States. 
Even though the general level of commodity prices had fallen after the 
Civil War and the World War, within five years after both of these 
wars the money wages of unskilled labor were double the pre-war fig- 
ures. 7 Nearly half of the cost of erecting a building consists of wage 
payments, and a large part of the cost of manufacturing brick out of 
clay, of making cement out of rock, and of sawing lumber out of trees 
in a forest is made up of labor outlays. 8 Therefore, building costs tend 
to rise with wages and to hold the increase, even after the wholesale 
prices of commodities have declined. From 1914 to 1920 Chicago build- 
ing costs, according to the Holabird and Root Index, advanced 60 per 
cent, and even after a sharp decline from 1920 to 1922, they remained 
30 per cent above the pre-war level. 9 Thus notwithstanding rising rents, 
building contractors find that they cannot erect new buildings on the 
same cost level as those already in existence, and, fearful of the stability 
of the higher-cost building level, they hesitate to make the long-term 
commitments involved in the erection of a building. Old buildings are 
consequently worth more not only because of their higher net incomes, 
but because of the higher reproduction costs which prevent this income 
from being reduced by an increase of the supply of buildings at the old 
cost level. The first phase of activity in the real estate market is thus 
the sale of improved properties at advancing prices due to the capitali- 
zation of their higher net incomes. This feature of the Chicago market 

7 Fig. 9 8. 

8 National Association of Building Trades Employers Bulletin, March, April, May, 1933, 
p. 2 : "The chart of the American Construction Council indicates that 76.1 7 per cent of the 
construction dollar goes into the workingmen's pockets. This labor hire is divided as fol- 
lows: at site, 44.36 per cent; shop, mill, dealer, 20.69 per cent; at source, 7.33 per cent; 
transportation, 4.09 per cent." 

9 From an unpublished index of building costs in Chicago prepared by Holabird and 
Root for the type of buildings constructed by them. It covers the period 1888-1932 and 
has costs for the year 1888 as the base. 



3 82 



ONE HUNDRED YEARS OF LAND VALUES 



began in early stages of the major cycles, or in 1832, 1848, 1863, 1887, 
and 1920, and continued until the culmination of the boom. 

4. It pays to erect new buildings. The rise in gross and net building 
rents continues under the pressure of the rapidly expanding population 

VOLUME OF NEW CONSTRUCTION IN CHICAGO - 1854-1932 

NOTE: 1=100 PERMITS, 5,000 FEET OF FRONTAGE, $500,000 IN NEW BUfLDINGS 




YEARS 

FIG. 93 

until it becomes profitable to erect new buildings. The first step in 
speculative building is the acquisition of a site, so that during or even 
before the building boom gets under way there is a rise in the volume of 
vacant lot purchases and in the number of lots subdivided. Notwith- 
standing the higher production costs of new structures, which may be 
partially offset by the increased use of machinery or labor-saving de- 
vices, the first crop of new buildings proves to be very profitable for the 
following reasons: Because they are new, because they are in the latest 



THE CHICAGO REAL ESTATE CYCLE 383 

architectural style, because they are in new neighborhoods, and be- 
cause they contain the most modern conveniences of the time, these 
new quarters command higher rents than do old buildings. Further- 
more, as the new buildings are adjusted to the prevailing size of family 
or type of use, there is less waste space and a larger proportion of net 
rentable area so that the returns per cubic foot of building space are 
even greater. Economy in the use of land may also be secured by those 
who first erect skyscraper or tall buildings in an area as they pay a 
price for the ground on the basis of its use for low buildings and thus 
virtually acquire the space above the old building heights for nothing. 
Thus by producing residential or office units of higher quality in better 
locations, the builder obtains sufficiently high returns, taken in con- 
junction with economies in the use of land and labor, to obtain a profit 
notwithstanding the higher level of building costs. Or as in the cases of 
factories, banks, stores, and theaters during periods of expanding ac^ 
tivity, the cost of the building may be so small a proportion of the 
total cost of producing or selling goods that the structures are erected 
notwithstanding a high cost level. 

5. The "volume of new construction rises. The impulse from an in- 
crease in the rate of population growth having thus communicated it- 
self to the rent cycle, the upswing in that cycle in turn stimulates the 
cycle of new construction and causes it to expand rapidly. The volume 
of building mounts very fast from the low point of the depression. The 
volume of new houses, stores, and factories erected in Chicago in the 
forty most active building years since 1854 was five times as great as 
the amount reared in the thirty-nine least active years. Tables LIV 
and LV show the extent of the rise in new building in the last two 
cycles. 

6. The volume of building is stimulated by easy credit. The building 
boom is stimulated and sustained by a liberal supply of capital made 
available by the expansion of credit institutions and attracted into new 
construction by the high profits made in such projects and by the high 
net yields of existing buildings. Financial institutions play an impor- 
tant role in this mania for building. In 1836 the Chicago branch of the 
Bank of Illinois and the state banks of issue were lavish in their grants 
of loans to real estate speculators and to builders. In the period prior 
to 1856 the new state banks of Illinois supported the building boom. In 
the great rebuilding of Chicago after the fire of 1871, eastern insurance 



ONE HUNDRED YEARS OF LAND VALUES 



companies readily loaned money for Chicago building operations. In 
the skyscraper and World's Fair boom of 1889 to 1892, funds were se- 

TABLE LIII* 
SEVENTY-NINE YEARS OF BUILDING IN CHICAGO, 1854-1932 



No. Years 


40 Most Ac- 
tive Years 


Total Value 


No. Years 


39 Least Ac- 
tive Years 


Total Value 


A 


l8CA C7 


$18. 306. 306 


6 


1858-63 


$ 10 281 500 


IO 


1864-71 


i 52,083, 600 


8 


1874-81! 




4. 


1880-02 


180,8^2,800 


7. . 


1882-88] 


205,356,626 


12 


100? i 6 


I ,OI4, 8^4,017 


12 


18931904 


354, 24Q,2I5 


I\ 


flQIQ 




2 


1917-18 


99,036,650 


gj 


1 IO2I 20 


2,671,847,462 


I 


IQ2O 


70 IO2 56o 








3 


1930-32 


126,053,530 


4O 




$4. 046 , 04 "? , 08 <; 


2Q. . 




$ 8^4,080,071 















* $4,046,945,085 built in 40 active years; 83 per cent built in 40 active years, nearly five times as much 
built in the half-period that was most active. The physical volume of building in the 40 active years is exagger- 
ated to some extent by the value figures because building costs were higher in these years. Computed from the 
annual figures for the cost of new buildings as shown by permits from the records of the Building Department 
of the city of Chicago. 



TABLE LIV* 

INDEX NUMBERS OF POPULATION, OFFICE RENTS, NEW CONSTRUCTION, NUMBER 
OF LOTS SUBDIVIDED, AND AGGREGATE LAND VALUES 

IN CHICAGO, 1918-27 
(Relative Numbers, 1918=100) 



Year 


Popula- 
tion 


Gross 
Income 


Net 
Rents t 


Value of 
New Con- 
struction 


Lots Sub- 
divided in 
Chicago 
Metropoli- 
tan Area 


No. of 
Transfer 


Land 
Value 


1018 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IQIQ 


IO2 


IOI 


121 


300 


311 


144 


IOO 


IQ2O 


106 


106 


IO7 


227 


480 


171 


IOO 


IQ2I . . 


in 


123 


146 


360 


544 


168 


IOO 


IO22 


114 


137 


107 


655 


888 


204 


125 


IO23 


118 


157 


26l 


046 


1 .233 


243 


ISO 


1024 


124 


1 60 


289 


86 1 


2.O33 


245 


175 


IQ25 


128 


180 


741; 


i ,034 


2,444 


262 


225 


IO26 


I^O 


190 


4O2 


1,054 


2,777 


260 


250 


I9 2 7 


J 34 


195 


336 


1,014 


2,000 


233 


250 



* See Table LXIII for figures for 1928-33, inclusive, 
t Figures from Table LII. 

cured from banks, the sale of stock, and mortgage obligations to finance 
the office and apartment buildings. In the last boom that culminated 



THE CHICAGO REAL ESTATE CYCLE 



385 



in 1929, a vast supply fund for building projects was tapped by the sale 
of real estate bonds because the public had become familiar with bonds 
as a result of the Liberty Loan campaigns in the World War and be- 
cause the splitting of a large mortgage into bonds of denominations as 
low as $100 vastly widened the market. This supply of capital mobi- 
lized by real estate mortgage houses and by the outlying state and na- 
tional banks of Chicago whose growth had been extremely rapid from 
1900 to 1929 was poured into the building field. 10 Table LVI shows the 

TABLE LV 

INDEX NUMBERS OF POPULATION, BUILDING, NUMBER OF LOTS SUB- 
DIVIDED, AND LAND VALUES IN CHICAGO, 1885-93 



Year 


Population* 


New 

Buildingf 


Lots Subdi- 
vided in 
Chicago Met- 
ropolitan Area 


Aggregate 
Land Values 


Consideration 
in Deeds 


188=: 


IOO 


IOO 


IOO 


IOO 


IOO 


1886 


1 06 


IO9 


244 


IOO 


151 


1887 


ill 


IOO 


422 


1 20 


165 


1888 


118 


104 


633 


140 


1 80 


1880 . , 


126 


127 


1,090 


1 60 


236 


1800.. . 


I7C 


242 


1, 800 


240 


414 


1891 


JO 

146 


270 


2,6oo 


255 


316 


1802 


i<?6 


324 


1 ,422 


273 


214 


1803 


158 


1^1 


800 


240 


22=: 















* In 1933 corporate limits of Chicago. 

t Figures before 1890 did not include rapidly growing annexed territory which increased in population from 
53,000 in 1880 to over 200,000 in 1890. 

increase in the amaunt of money loaned on mortgages and trust deeds 
in Cook County from 1918 to 1929. 

7. "Shoestring" financing swells the number of new structures. The 
ease of financing new buildings attracted many subcontractors and 
even building mechanics into the construction industry. It became 
possible to erect buildings with a very small outlay of capital on the 

10 "A particularly ominous development was the expansion of the banking system itself 
for the specific purpose of financing real estate promotion and development. Real estate 
interests dominated the policies of many banks, and thousands of new banks were organ- 
ized and chartered for the specific purpose of providing the credit facilities for proposed 
real estate promotions. The greater proportion of these were state banks and trust com- 
panies, many of them were located in the outlying sections of the larger cities or in suburban 
regions not fully occupied by older and more established banking institutions" (Herbert 
D. Simpson, "Real Estate Speculation and the Depression," American Economic Review, 
XXIII, No. i [March, 1933], 164). 



ONE HUNDRED YEARS OF LAND VALUES 



part of these entrepreneurs, for almost the whole amount required to 
erect the building and even to buy the lot could be secured in the hey- 
day of these booms by loans on first and second mortgages." Con- 
tractors in the last boom in Chicago sometimes made an agreement to 
purchase a lot, put up a small deposit on the purchase price, drew plans 
for an elaborate structure, and on this basis secured a loan large enough 

TABLE LVI* 

THE AMOUNT OF MONEY LOANED ON MORTGAGES AND 

TRUST DEEDS IN COOK COUNTY, ILLINOIS, 

1918-32 



Year 


Aggregate Amount 
of Stated 
Consideration 


Relative 
Numbers 
1918 = 100 


1018 


$16'?, 687, 177 


IOO 


IQIQ 


24.1 , 177,84.0 


14.8 


I 020. . 


3cx, 587,870 


187 


IQ2I . . 


361 ,02"; , 200 


221 


IO22 


CCQ OI4. IQ2 


777 


IQ2? 


606 882 24.7 


4.26 


1024. 


74.6 70^ 3 30 


4.^6 


IO2"C 


086 060 14.8 


601 


IO26 


I ,O33 ,864, 243 


6*2 


IQ27 . 


I ,O4^ ,007,4.13 


630 


1028. . 


I ,030*432, 23< 


635 


IQ2Q. . 


7cfQ 3Qcr, 774. 


464 


IQ7O 


42^ 164 2I<\ 


260 


IQ3I 


264. ^84 083 


l62 


IQ32 


143 3OO 644 


87 









* From the annual reviews of the Economist (Chicago, 1919-32). The 
foregoing figures include renewal of old loans and new loans on existing 
buildings as well as loans on new construction projects. 

to pay the balance due on the lot and to complete the building. 12 Again 
several large Loop office buildings, such as the one at the southwest 
corner of Clark and Madison streets 13 and other structures, were 
erected by parties who secured a ground lease and who virtually 
without any capital succeeded in securing a loan on a bond issue suffi- 
cient to erect a skyscraper. The increase in the volume of long-term 
leases during these boom periods is a material factor promoting rapid 
speculative advances in land values, for it makes possible "shoestring" 

11 Walter Kuehnle, an unpublished study in the county assessor's office. 

12 From cases reported to the writer by real estate brokers and also from cases the details 
of which are known by him. 

*3 Statements of Loop real estate brokers to the writer. 



THE CHICAGO REAL ESTATE CYCLE 387 

financing in the case of ground sites, whose outright purchase would re- 
quire a large sum of money. The lessee under the terms of a long-term 
lease, after satisfying the lessor as to his ability to meet the terms of the 
lease, is required to pay only the annual rent instead of a capitalized 
sum of from ten to twenty times that amount. If the lessee, after ob- 
taining a lease for ninety-nine years 14 in this manner, could float a bond 
issue to erect a skyscraper on the mere security of the leasehold, it is 
readily observable that little capital was required by some of the pro- 
moters of huge structures. When such financing methods prevailed, it 
is little wonder that there was such a rush to erect new buildings, re- 
gardless of the cost of the land, labor, or materials, for the promoter 
who engineered the affair did not risk much of his own wealth. Thus 
a great many men worked secretly and independently on a great vari- 
ety of structures in many sections of the city. There was no central 
clearing house to correlate the impending supply of buildings with the 
probable demand, so that when all these plans came to fruition an as- 
tonishing number of new structures had been erected. 

8. The new buildings absorb vacant land: the land boom. A building 
boom absorbs a considerable amount of vacant land and thus suddenly 
gives an earning power to certain tracts that have long been dormant. 
The 97,511 buildings erected in Chicago in the seven years from 1922 
to 1928, inclusive, required 3,060,111 front feet, or 580 miles of street 
frontage. 15 As a result of this demand for vacant lots, the prices of 
tracts adjoining the settled area that have street improvements which 
make them "ripe for building" advance rapidly. Speculators who have 
acquired these lots from owners who did not foresee this movement and 
those who held their property are in a position to make large profits. 
The news of the fortunes made in their very back yards or in their own 
neighborhoods spreads like wildfire through the members of the com- 
munity. At such times the possibility of making more money by buy- 

14 In Chicago the wharf sites along the Chicago River were leased for nominal rentals for 
nine-hundred and ninety-nine years by 1835. A survey of the records of the Chicago Title 
and Trust Co. indicates that many leases for twenty years and a few for as long as fifty 
years were made in the central business district of Chicago prior to the panic of 1873. Some 
ninety-nine-year leases were noted in 1887, and in the boom of 1890 and the years follow- 
ing these ninety-nine-year leases increased in number until by 1933 a considerable propor- 
tion of the property in the Loop was tied up by such leases. There is no legal reason for the 
ninety-nine-year period, save for an early belief, which had no basis in court decisions, that 
a lease for a longer period would violate the rule against perpetuities. See Table XCVI. 

j s Records of the Building Department of the city of Chicago. 



388 ONE HUNDRED YEARS OF LAND VALUES 

ing and selling a few vacant lots than by lifetime of hard labor proves 
an irresistible temptation to many persons. 16 

9. Optimistic population forecasts during the boom. At this phase of 
the real estate cycle, the rapid rate of increase in the population of the 
city that has recently taken place is projected far into the future in the 
rosy calculations that are broadcast by real estate men. A city that 
will surpass in size any metropolis the world has ever known before is 
erected in these speculative dreams, and facts and figures are collected 
by business men of the community and by "distinguished scholars" to 
buttress these "castles in Spain" and to make them seem tangible to 
the lay mind. Thus Charles H. Wacker in 1924 estimated that Chicago 
would have a population of 18,000,000 by I974 17 and Professor J. Paul 
Goode predicted in 1926 a total of 15,000,000 for the city at an inde- 
terminate future date when it might be the greatest city the world has 
ever known. 18 Other far more conservative forecasts, such as that of 
Helen Jeter in 1927 which indicated a population of only 5,100,000 for 
Chicago by i96o, 19 would have been lightly passed over in the heyday 
of the boom of 1925 and 1926. 

At such a period the imagination of the community conjures up the 
picture of an endless stream of population increase concentrating 
about Chicago. This undiminished flow of people will require homes; 
it will cause the vacant prairies for miles and miles to be filled with new 
dwellings and new shopping centers to spring up in cornfields. Such 
a constant population pressure will sustain apartment rents at con- 
stantly advancing levels and will produce astounding increases in store 
rents, for there is never the slightest doubt but that all these people will 
be employed fully at ever advancing wages. 

10. The vision of new cities in cornfields: the methods of some subdivid- 
ers. As deceptive as a mirage in the desert is this vision of new cities 
that seems to be about to rise on the outskirts of the old city, and many 

16 A Greek physician who came to Chicago about 1915 acquired with a small original 
investment a number of vacant business corners until by 1928 he owned eighty-seven such 
corners, subject to mortgages with an estimated equity of $6,000,000. Blocks along 
Seventy-ninth Street that sold for as little as $14,000 in 1905 brought over $1,000,000 in 
1926. Thousands of stories of sudden profits accruing to the owners of land could be cited 
for this period. 

x ? Chicago Journal, April 22, 1924. 

18 J. Paul Goode, The Economic Background of Chicago (1926), p. 69. 

* Helen R. Jeter, Trends of Population in the Region of Chicago (Chicago: University of 
Chicago Press, 1927). 






THE CHICAGO REAL ESTATE CYCLE 



389 



members of the community, fascinated by the picture, are filled with a 
longing to acquire a plot of land that will so speedily rise in value as a 
result of this population pressure. Some professional subdividers take 
advantage of this situation. 20 They know that the mechanics of the 

VOLUME OF SUBDIVIDING IN CHICAGO -1830 TO 1933 

COOK COUNTY- 1877 TO 1932 AND CHICAGO METROPOLITAN REGION - 1874 TO 1932 
NOTE: 1=100 ACRES OR 500 LOTS 




real estate market are a mystery to a layman and that there is no device 
like the stock ticker for broadcasting land prices. Accordingly, they 
subdivide large tracts of land in all directions; develop large sales forces 

20 The following account applies particularly to subdividers who entered the business or 
enlarged the scope of their operations in boom periods. A number of conservative real 
estate firms who subdivided tracts and sold lots in the period from 1895 to 1920 stopped 
subdividing before 1924. The large profits made by many investors who purchased lots 
from these conservative firms in the period from 1895 to 1920 stimulated the sale of lots 
by the reckless subdivision operators of 1925 and 1926. 



390 ONE HUNDRED YEARS OF LAND VALUES 

who get into contact with "prospects" through advertisements and tele- 
phone "leads"; enlist amateur salesmen called "bird dogs" for the main 
purpose of securing introductions to their circle of acquaintances; and 
work through house-to-house canvasses. An appointment once secured 
with a prospective lot-buyer, he is induced to visit the "property," the 
road to which is made easy by swift automobile and express-train trans- 
portation. Once arrived at the scene of the "New Eden," 21 a vivid pic- 
ture is painted of the rows of apartment buildings and stores that will 
soon arise on the very ground on which he is standing, and, to leave 
nothing to the imagination, the scene is frequently painted on a broad 
canvass that stretches across the subdivision office. Plausibility is lent 
to this prophetic vision by the fact well known to both the customer and 
the salesman, that this very swift transition from raw prairie to built- 
up communities has already taken place in a number of localities, and 
the prospect is easily led to believe that the extraordinary advantages 
of this spot from the point of view of transportation, proximity to in- 
dustries, and restrictions against undesirable improvements will in- 
sure that it will take place here. Without knowledge of the prices 
of adjoining tracts of land and under the stimulus of the blandish- 
ments of the salesman, assisted by the wiles of his manager, and un- 
der the influence of the purchases by other prospects which are an- 
nounced in a loud voice by the sales manager from time to time and 
which give the appearance of a brisk and lively demand for this garden 
spot of the universe, the customer is frequently induced to make a de- 
posit and sign a contract for the purchase of a lot. As the prices of these 
little plots of prairie are plainly marked on the plat and are maintained 
at a standard price in this artificial market, and as the company selling 
the lots has the title, there is none of the delay involved in dickering 
with the owner and with higgling over the price that occurs in the case 
of transactions made in a broker's office. Thus the "prospect" has be- 
come the owner of an equity in a lot which he is told will save him from 
the poorhouse in his old age. If he later repents of his zeal and wonders 
if he was not mistaken, the fact that he will lose his deposit deters him 
from withdrawing or a second visit of the salesman restores his con- 
fidence. He soon finds, however, that he has a continuing obligation, 
for the monthly payments which he must make to preserve his equity 

31 "New Eden" was the name of the townsite described in Charles Dickens' novel, 
Martin Chuzzlewit. 



THE CHICAGO REAL ESTATE CYCLE 391 

and to prevent the forfeiture of his contract make a constant drain upon 
his resources. In most of the land booms a great many lot-buyers stop 
making payments or abandon their holdings before receiving their 
deeds, so that in the end they have not even a narrow strip of vacant 
land to show for their outlays, and not even a cemetery lot in which 
finally they can be interred with their hopes. 22 

Such is the nature of the subdivision boom which has occurred at 
the most hectic phase of all the five major real estate cycles in Chicago, 
as Figure 94 on page 389 indicates. In 1836, in 1856, in 1872, in 1890, 
and in 1925 the same story was repeated with some variations in the 
mode of transportation to the subdivision and of communication with 
the prospect but with little change in the nature of the sales arguments. 
The assumption at all such times is that population and new building 
will continue to grow indefinitely at the same rapid rate and that va- 
cant land will continue to be absorbed at least as rapidly in the future as 
it has been in the immediate past. Close or careful calculations are not 
even made on the basis of the prevailing rapid rate of absorption, and 
the territory subdivided into lots exceeds any possible demand for 
years to come. Figures 5, 10, 19, and 41, showing the area subdivided 
in the various boom periods compared with the maps of the settled area 
for those periods, indicate how far beyond the built-up area the sub- 
dividers extended their activities in every cycle. When the town of 
Chicago was confined to the banks of the river, subdivisions south of 
Roosevelt Road or near Chicago Avenue were extremely remote. Again 
when in 1856 Chicago did extend to Roosevelt Road and Chicago Av- 
enue, subdivisions in Hyde Park and Lake View townships were far 
beyond the fringe of the city. Again, prior to 1873 great numbers of 
lots were subdivided southwest along the Rock Island Railroad and 
northwest along the North Western Railroad, although these sections 
were very thinly settled. Prior to 1893 not only were wide areas sub- 
divided within the corporate limits of Chicago, but thousands of lots 
were offered for sale in outlying suburban towns and in proposed manu- 
facturing centers. In the last boom, vacant lots were being sold in a 
belt of land three miles wide along the lake shore for forty miles north 

^ 

23 For an excellent account of subdivision operations see Ernest M. Fisher, "Speculation 
in Suburban Lands," American Economic Review, XXIII, No. i (March, 1933), 158-61. 
See also Herbert D. Simpson and John E. Burton, The Valuation of Vacant Land in Sub- 
urban Areas (Chicago, 1931). 




392 ONE HUNDRED YEARS OF LAND VALUES 

of Chicago, in another belt south along the lake shore to Michigan City, 
and beyond and in still another belt stretching westward along Roose- 
velt Road and Twenty-second Street to Wheaton and LaGrange. There 
were also numerous other subdivisions stretching northwest along the 
North Western Railroad to Barrington and Palatine and southwest to 
One Hundred and Eleventh and Harlem Avenue. Regardless of how 
rapidly Chicago has grown, the new subdivisions have grown faster. 23 
Tables LIV and LV show the extreme speed with which the subdivision 
business gained momentum and how its rate of growth outstripped that 
of all other factors in the real estate cycle in the land booms culminating 
in 1890 and 1926. 

ii. Lavish expenditures for public improvements. During this build- 
ing and subdivision boom, there are lavish expenditures for public im- 
provements in some localities. The cost of these is financed either 
by bond issues, which are readily passed by popular vote at such 
times, or by special assessments payable in five or ten annual in- 
stalments, which are likewise cheerfully assumed by landowners in 
the belief that it will enhance the value of their land still more. 24 
Consequently, new bridges are built or streets are widened in old 
neighborhoods, and miles of pavements, sidewalks, and sewers are 
constructed in outlying subdivisions. Thus the public authorities 
not only do not limit the output of subdivided lots, but they en- 
courage the rapid increase in their supply by enabling sewers, side- 
walks, and pavements to be installed on vacant prairies without 
cost to the subdivider. The sight of newly installed sidewalks in 
a tract that would otherwise be only a farm or cow pasture gives the 
misleading impression that it is the first step in the growth of a new 
community, the other steps of which are to follow shortly. If in addi- 
tion to these sidewalks, which are so cheap in proportion to the selling 
effect they produce that they are frequently installed by the subdivid- 
ers themselves, paved streets are laid down at community expense, and 
a few houses or apartment buildings are erected as decoys, this seems to 
be a positive guaranty to gullible lot-buyers in boom periods that the 

23 In Cook County outside of Chicago there were 335,000 vacant lots in 1928, which ac- 
cording to the estimates of population increase by Helen R. Jeter will not be entirely ab- 
sorbed even by 1960 (Simpson, op. cit., p. 164). 

* In some cases the improvements were paid for by the subdividers and added to the 
lot prices, but this method of financing was usually applied only to sidewalks in the Chicago 
area. 



THE CHICAGO REAL ESTATE CYCLE 393 

entire district will soon be built solidly with homes, apartments, and 
stores. The contractors who have constructed the "frame" of pave- 
ments and sidewalks for this beautiful picture which usually does not 
become a reality for years afterward, if ever, frequently reap large 
profits from lucrative contracts and after cashing in their bonds or 
warrants withdraw from the scene. The community is left with the 
problem of abandoned subdivisions for years afterward lots over- 
grown with weeds, wasted capital in unused streets and sewers, de- 
faulted improvement obligations, unpaid taxes and special assessments, 
a few houses in disrepair or occupied at low rentals by the few persons 
who care to live in such lonely places, and discouraged lot-buyers who 
have their funds tied up in a manner that can yield them no return for 
years to come. Such areas cannot be turned back into farms, for after 
a number of lots have been sold, it is usually impossible to assemble the 
parcels under one ownership so that streets and alleys can be vacated 
and fields large enough for farming pieced together, and the sidewalks 
and pavements likewise are an obstacle to agricultural use. Hence such 
subdivided districts forcibly withdraw land from any kind of use for a 
long period of time, for they are not "ripe" for full utilization as home- 
sites and they cannot be used as farms except in the limited form of 
garden spots. By the time these areas are actually needed for residen- 
tial development, the old street improvements have usually fallen into 
disrepair and have to be replaced, while a straggling collection of old 
houses frequently occupied by disreputable elements that sometimes 
live on the fringe of a city, and a lot and block plan that may have be- 
come archaic, make such districts less desirable for new homes than 
adjoining farm lands that have not been marred by such premature 
promotion. 

Tables LVII, LVIII, and LVIX and Figure 98 show the rapid rise in 
the amount of money spent in public improvements in the boom periods 
prior to 1873, 1893, and 1929 as well as the subsequent decline. 

Summarizing the various phases of the real estate cycle up to this 
point, Tables LIV and LV show how increased demand for buildings as 
a result of improved business conditions and population increase pro- 
duce an even greater increase in gross rents, how that in turn causes a 
still greater rise in net rents, how that leads to an even higher percent- 
age of increase in building operations, and how that finally produces an 
even more extraordinary rate of increase in the number of lots sub- 



394 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE LVII* 

INCREASE IN ANNUAL COST OF SPECIAL ASSESSMENTS 
IN CHICAGO, 1862-71, FOR YEARS ENDING APRIL i 



Year 


Aggregate 
Amount 


Index Numbers 
(1862 = 100) 
Amount 


1862 . . . 


$ A6.6l1 


IOO 


1863 


4.6 4.O 3 


IOO 


1864 


80, 160 


IQI 


1865. . 


103 , ^76 


222 


1866 


802, oc; 


1 ,721 


1867 


217 206 


680 


1868 


I 2.^4 4.^6 


2 OO7 


1860 


2 3<K 683 


c 14.2 


1870 


2,8^6,8^2 


6,088 


1871 


2, 2CQ,836 


e,o6^ 









Report of the Board of Local Improvements of Chicago (1901-2), p. 141. 



TABLE LVIII* 

INCREASE IN ANNUAL COST OF SPECIAL ASSESSMENTS 

IN CHICAGO, 1877-92 

(For Years Ending April i Prior to 1876, and for Years 
Ending December 31 Thereafter) 



Year 


Aggregate 
Amount 


Index Numbers 
(1877 = 100) 
Amount 


1877 


$124,408 


IOO 


1878 


284,000 


220 


1870 . 


q88,o^6 


477 


1880 


080,806 


706 


1881 


I 227 I7O 


080 


1882 


I 30^ 373 


I 1 2O 


1883 


2,232 7^7 


I 703 


1884 


2. 8^7, OCX 


2, 2Q3 


1885 


2, 880, 54<; 


2, 32O 


1886 


7 707, ^68 


2,660 


1887 


3, 160,474 


2, ^40 


1888 


7 6$< O^7 


2 Q3.6 


1880 


4,220,870 


7 ,400 


1800 


6,087, i^< 


z ,612 


1801. . 


8, 700,442, 


7,o6o 


1802. . 


14,505, 702 


11,650 









Report of the Board of Local Improvements of Chicago (1901-2), p. 141. 



THE CHICAGO REAL ESTATE CYCLE 



395 



TABLE LIX* 

RISE IN ANNUAL AMOUNTS OF SPECIAL ASSESSMENTS 
IN CHICAGO, 1919-27 



Year 


Aggregate 
Amount 


Relative Numbers 
1919 = 100 


IQIQ 


$ 6,521,691 


IOO 


IQ2O 


7,417,431 


113 


IQ2I 


8,183,549 


125 


1922 


IQ 3O<? 363 


2QO 


IO23 


l6, lejl , 344 


248 


IQ2A 


34,472,824 


528 


IQ2 1 ? 


20,040,41"? 


32O 


y 2 

IO20 


31,065,812 


477 


1927 


56,980,268 


874 



* Includes cost of sidewalks, paving, sewers, drains, water-service pipes, 
water-supply pipes, and street openings and widening installed both by pub- 
lic authorities and under private contract. See Table LXII for figures for 
1927-32. 



TABLE LX 

DECREASE IN ANNUAL COST OF SPECIAL ASSESSMENTS 
IN CHICAGO, 1870-77 



Year 


Aggregate 
Amount 


Index Numbers 
1870=100 


l8?O 


$ 2,836,8<C2 


IOO 


1871 


2, 350,836 


83 


1874 


740 , 460 


26 


1875;. 


723, 254 


25 


1876 


1,516,081 


53 


l877 


124,408 


4 









TABLE LXI 

DECREASE IN ANNUAL COST OF SPECIAL ASSESSMENTS 
IN CHICAGO, 1892-97 



Year 


Aggregate 
Amount 


Index Numbers 
1892 = 100 


1802 


$14, zos , 702 


IOO 


1803 


6,001 ,446 


41 


i8oA 


2 003,814 


2O 


1895 

1806 


4,387,214 

4,037, 320 


30 
28 


1807 


2,102,951 


15 









396 



ONE HUNDRED YEARS OF LAND VALUES 



divided, accompanied by a rapid growth in the amount spent for public 
improvements. 

12. All the real estate factors at full tide: the peak. The point is then 
reached in the Chicago real estate cycle when all the various factors 

VOLUME OF REAL ESTATE CONVEYANCES IN 
COOK COUNTY, ILLINOIS -1869-1932 

NOTE: 1=1,000 RECORDED INSTRUMENTS, 1,000 TRANSFERS, $8,000.000 
IN TOTAL CONSIDERATION IN DEEDS 




YEARS 

FIG. 95 



combine to produce their maximum effect and when all the forces pull 
together in the same direction to bring the real estate market to its apex 
of activity. Such a point is indicated by the maximum volume of real 
estate transfers shown in Figure 95, and it occurred in 1836, 1853-55, 



THE CHICAGO REAL ESTATE CYCLE 



397 



1869, 1872, 1890, and 1925. The volume of building and the number of 
lots subdivided may not reach their high points at the same time that 
the market is most active in all its phases. Plans for buildings that were 
formulated and financed at the height of the boom may not come to 

THE RISE IN CHICAGO CITY TAXES AND SPECIAL ASSESSMENTS 

1865-1931 

/ = $200,000 TAXES 



$100,000 SPECIAL ASSESSMENTS 




fruition until the following year. A heavy sale of subdivision lots in the 

heyday of the market may result in extensive new subdivisions in the 

following year, the lots in which, however, are not so extensively sold. 

Thus in some cycles, even before the real estate market has reached 



ONE HUNDRED YEARS OF LAND VALUES 



its peak, and in all cases before the beginning of the depression, the rate 
of population growth of Chicago has fallen off. As the supply of build- 
ing space has greatly increased at the same time, the rise in rents slack- 
ens and the number of vacancies increases. Table LXIII shows the 
factors operating in the downsweep of the last cycle. 

13. The reverse movement begins: the lull. Soon after the peak of 
real estate activity, while the underlying factors population growth, 
rent increases, and new construction activity that generated the boom 
are preparing to reverse their trend, the land market enters into a dull 
phase. The property-owning community is still permeated with the 

TABLE LXII 

DECREASE IN ANNUAL COST OF SPECIAL ASSESSMENTS 
IN CHICAGO, 1927-32 



Year 


Aggregate 
Amount 


Index Numbers 

IQ27 = IOO 


IQ27 


$56,980,268 


IOO 


1028. . 


30,080,831; 


7O 


IQ2Q. . 


27,672,576 


48 


IQ3O 


26 768 512 


4.7 


IQ3I 


12 820 O3O 


23 


IQ32 


2.O38 2OO 











rosy dreams that rilled the air on the great upswing in land values, fi- 
nancial institutions still make loans freely on the peak level of prices, 
and nothing has happened to disturb the public confidence in the sta- 
bility of the values that then prevail. It is generally observed, how- 
ever, that the period of rapid advance in land prices is over, and there 
is no rush on the part of new investors to buy land before it rises higher. 
Asking prices are being advanced, but there are fewer cash sales and 
more trading of one kind of equity for another. The owner of a heavily 
mortgaged building seeks to trade his equity for a clear lot or farm and 
is sometimes even willing to take mortgaged vacant land for his inter- 
est. The possessors of equities in subdivision contracts find no market 
for their interests except from other subdividers, who while regarding 
such contracts as of no value, induce their holders to trade them in for 
other subdivision lots at a higher price in order to secure an additional 
cash down payment or monthly cash instalments. Such was the situa- 



THE CHICAGO REAL ESTATE CYCLE 



399 



tion that prevailed in the latter parts of 1836, 1856, 1873, and through- 
out most of the entire year in 1891, 1892, 1927, 1928, and 1929. 

14. Foreclosures increase. Meanwhile, the foreclosure rate has be- 
gun to increase. The holders of heavily mortgaged properties, who find 
themselves called upon to meet prepayments upon both first and second 

TABLE LXIII 

RENTS, VALUE OF NEW BUILDINGS, TRANSFERS, NUMBER OF LOTS SUBDIVIDED, 

NUMBER OF FORECLOSURES, VACANCIES IN THE CENTRAL BUSINESS 

DISTRICT, LAND VALUES IN CHICAGO, 1926-33 

(Relative Numbers, 1926=100) 



Year 


Gross 
Office 
Rents* 


Rents 
Work- 
ing- 
men's 
Dwell- 
ings t 


Net 
Office 
Rents* 


Value 
New 
Build- 
ings 


No. 
Acres 
Subdi- 
vided in 
Chi- 
cago t 


No. 
Fore- 
closures 
in Cook 
County 


Occupancy 
of Offices in 
Central 
Business 
District! 


Land 

Values 


Trans- 
fers 


1026 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


IOO 


1927 
1028 


103 

104 


96.8 

03 . T. 


84 

94 


96 

86 


50 

31 


153 

2 2O 


IOI 
95 


IOO 
IOO 


90 
84 


IQ2Q 


103 


9O.2 


IOI 


55 


9 


270 


92 


95 


69 


1930 

IQ3I . . 


99 
9 


87-5 
82.2 


90 
76 


22 
13 


o 
o 


4OO 
700 


9i 
89 


80 
62 


56 
51 


IQ32 


77 


60 4 


24 


I 


o 


1, 060 


86 


5 


49 






ZA } 










81 


40 




A yoo 





















* John P. Hooker, op. cit., p. 347. The following figures for 90 properties in the central business district of 
Chicago, which represented one- fourth of the value of the land and buildings in the Loop and which were in 
an exceptionally strong financial position, are as follows 

Gross Net 

Income Income 

1928 loo too 

1931 82.5 66.7 

1932 69 45-9 

t U.S. Department of Labor, Retail Prices and Cost of Living (December, 1932), p. 16. The figures are for 
June of each year. The figures of the National Industrial Conference Board indicate a decline of 50 per cent in 
certain classes of workingmen's dwellings in Chicago from 1923 to 1933- 

J Figures are for January i of each year (Report of Office Building Managers' Association of Chicago). 

mortgages as well as the interest charges, begin to get into difficulties 
with the holders of the junior incumbrances as soon as the peak income 
declines slightly or a heavy prepayment falls due. For example, the 
holders of second mortgages began to foreclose in increasing numbers in 
1927, 1928, and 1929, but there was as yet no doubt as to the safety of 
the underlying first mortgages. 

15. The stock-market debacle and the onset of the depression in general 
business. Up to this time there has been no major recession in general 



400 ONE HUNDRED YEARS OF LAND VALUES 

business activity, and real estate has grown dull because of reasons 
peculiar to itself. The end of the general period of prosperity in all 
lines is approaching, however, and on some red-letter day in 1837, 1857, 
1873, 1893, or X 9 2 9 a crash on the stock market rudely shatters the 
dream of never ending profits. At first this fact has no great effect 
upon real estate value. No overnight call for more margin forces the 
liquidation of land, and there is no short selling. Mortgages or trust 
deeds usually have five years to run, and even when they fall due, about 
eighteen months is required in Illinois for the holder of a trust deed to 
gain title by foreclosure. Hence the equity holders of real estate, un- 
like those of stocks, are not panic-stricken when the first financial storm 
breaks over the country. In fact, they frequently contrast their favor- 
able position with that of the fate of stock-buyers and secretly rejoice 
in the misfortunes of the public in the security field, hoping that the 
stock debacle will turn the people back to land-buying. 

1 6. The process of attrition. The general slackening of industrial ac- 
tivity which continues after the stock-market crash, however, begins to 
wear down land values by a process of attrition. Within a year after 
the onset of the depression, increasing unemployment and reduced 
wages have sapped the public buying power. Many men leave the ur- 
ban centers and return to the farm or the small town where they can 
live more cheaply. The result is that the population of the great cen- 
ters remains stationary or declines, and many of those who are left are 
forced to "double up" or to contract their living quarters in order to 
save money. 25 Thus the supply of vacant houses or apartments in- 
creases and in order to secure occupants the agents cut rents. This de- 
cline in gross rents causes an even greater decline in net rents, because 
the same elements in operating expenses that are fixed or slow to change 
that helped the landlord on the upswing of the cycle now work against 
him. The reduction in the margin between income and operating ex- 
penses has now proceeded to the point where there is not even enough 
left to pay the interest charges on the first mortgages. The second- 
mortgage holders, who were the first to foreclose, are themselves wiped 
out in the flood of foreclosures of first mortgages, such as that which 
began in 1930. All the factors now operate to depress real estate values 

2 s In 1857 Colbert and Chamberlin (Chicago and the Great Conflagration, p. 96) state: 
"Great numbers of workers left the city for want of employment and those who remained 
were obliged to go into narrowed quarters to reduce expenses." 



THE CHICAGO REAL ESTATE CYCLE 401 

as they operated to elevate them before. As more buildings go into the 
hands of receivers, rents are cut more drastically than they were by 
the owners, for these court officers do not hestitate to make reductions 
that will fill their buildings at the expense of owners who are struggling 
to keep their rents high enough to meet their fixed charges. The pro- 
gressive lowering of rents forces more buildings into the hands of re- 
ceivers. Meanwhile, the tax burden has not been reduced in proportion 
to the decline in net incomes, and it now amounts to a higher proportion 
of the aggregate rent roll. The owners of many small homes who in 
many cases have used all their savings as well as their surplus earnings 
in the attempt to save their mortgaged dwellings now find they can 
keep up the struggle no longer and the bungalow goes through the fore- 
closure mill with the twenty-story office building or apartment hotel. 

17. The banks reverse their boom policy on real estate loans. In this 
situation the financial institutions reverse their liberal lending policy 
of the earlier period. In most cases the banking power is badly crippled, 
as it was in 1837 when the state banks of Illinois were being forced into 
liquidation, or in 1861 and 1862 when the state banks of issue were 
compelled to close, or in 1877 when most of the Chicago savings banks 
failed, or in 1893 when several Chicago banks failed, or from 1930 to 
1933 when 163 out of 200 Chicago banks were compelled to suspend 
operations. As real estate investment was one of the principal means 
by which the assets of the banks had become frozen and as liquidity is of 
extreme importance during an epidemic of bank runs, the banks that 
remain open are extremely cautious. 26 With part of their assets already 
tied up in real estate obligations, they will hardly loan money on mort- 
gages on any basis. In the case of one Loop building, for which a $3,- 
500,000 construction loan was readily obtained in 1928, a first-mort- 
gage loan of $350,000 could be secured only with difficulty in 1932. 

18. The period of stagnation and foreclosures. Nearly all phases of 
real estate activity are now virtually suspended. Subdividing had come 
to a stop with the advent of the dull market even before the debacle in 
general business. New building operations which were maintained at 

36 "But it would seem that we can safely say this much: that real estate, real estate 
securities, and real estate affiliations in some form have been the largest single factor in the 
failure of the 4,800 banks that have closed their doors in the last three years and in the 
"frozen" conditions of a large proportion of the banks that still remain open" (Simpson, 
op. cit., p. 165). 



402 ONE HUNDRED YEARS OF LAND VALUES 

full volume to the very eve of the business depression have dwindled 
away to a negligible amount. Gross rents have declined 50 per cent 
and net rents of the best properties are not enough to pay interest 
charges on conservative mortgages, and in most cases they are no more 
than sufficient to pay operating expenses and taxes. Normal sales of 
real estate have ceased. There is a considerable number of " transfers," 
but these are mostly conveyances to relatives to avoid judgments, quit- 
claim deeds of equity holders to the mortgage holders to avoid fore- 
closure, transfers involving a trade of other properties, and masters' 
deeds disposing of the title of foreclosed properties. Most vacant land 
is unsalable at any price, for there is no immediate prospect of its 
profitable utilization. Improved property, incumbered with mortgages, 
is not in shape to be delivered to buyers or to be sold conveniently be- 
cause most of the mortgages are in default or in process of going through 
the foreclosure mill. A buyer would have to acquire not only the title 
of the owner, but he would be compelled to pay off or renew also the 
maturing or past-due mortgage obligation. A large number of prop- 
erties are being disposed of at foreclosure sales, but since an absolute 
title is not transferred, and since all cash payment would be required, 
few attend the sales except the holder of the mortgage who bids in the 
property at his own price. If the title holder signed the mortgage and is 
financially responsible, the mortgagee will bid far less than the face 
amount of the mortgage and secure a deficiency judgment for the bal- 
ance; but if the title holder has no other known assets, the mortgagee 
will bid up the property to the full amount of the mortgage and costs to 
prevent creditors of the defaulting owner to secure the property for a 
smaller amount. The amount of such sales consequently has little 
bearing on the value of real estate. In the recent depression, the cheap- 
est way to acquire properties was to acquire the mortgage bonds from 
discouraged holders at a great discount and then to foreclose upon the 
title holder and freeze out the remaining bondholders at the foreclosure 
sale. While this was going on, there would naturally be few buyers for 
properties from title holders. Foreclosures must run their course and 
old obligations be wiped out before the real estate market is in a posi- 
tion to revive. 

19. The wreckage is cleared away. In time, however, usually four or 
five years, the wreckage of the collapse of the previous boom is cleared 
away. Property that was heavily incumbered comes into the hands of 



THE CHICAGO REAL ESTATE CYCLE 403 

mortgage holders, and the past obligations are thereby wiped out. A 
new start can be made, as the mortgage holders are frequently willing 
to accept the amount of their mortgage or less for their holdings. Mean- 
while, the beginnings of industrial recovery or a rise in the stock market 
has given funds to certain groups to invest in real estate. These shrewd 
individuals begin to pick up the best bargains to be found, until these 
are taken off the market. During this period in which there has been 
little if any building, population has been increasing slowly until most 
of the vacant space has been absorbed. Rents begin to rise once more, 
and as construction costs have been hammered down somewhat by the 
depression, it becomes profitable to build again. The long real estate 
cycle has come back again to the starting-point. 

20. Ready for another boom which does not come automatically. From 
this account it might be inferred that the real estate cycle automatically 
repeats itself. Such is by no means the case. According to the view 
presented, the cycle has been generated largely by a sudden and un- 
expected increase in population which was in turn due to a rush to take 
advantage of economic opportunities. If this theory is correct, then the 
recurrence of land booms in Chicago in the future will depend on the 
expansion of industrial opportunities which attract a sudden accession 
of population. 

E. MINOR MOVEMENTS OF THE INDIVIDUAL REAL ESTATE FACTORS 

In the foregoing description of a typical sequence of events in the 
Chicago real estate cycle, there is a danger of oversimplification. As 
Figures 99, 100, 101, and 102 show, there has been no definite time in- 
terval between land booms in Chicago, and, as they also indicate, the 
various factors in the real estate cycle sometimes trace independent 
cycles of their own, which do not coincide or follow each other in ex- 
actly the same order in different cycles. In the period from 1879 to 
1882 a rise of building activity above normal was accompanied by a 
rapid rise of land values in the Board of Trade quarters of Chicago, 
but there was no widespread land boom throughout the city. From 
1910 to 1916 building and subdivision activity rose above the trend 
line, but the rate of increase in land values did not carry it above nor- 
mal. Thus some of the factors in the real estate cycle may have ab- 
normal periods of activity without communicating their effect to all 
the other forces. When all the real estate forces are stimulated to ac- 



404 



ONE HUNDRED YEARS OF LAND VALUES 



tivity far above normal, however, the phenomenon of the real estate or 
land boom is produced. 

TABLE LXIV 

THE PERCENTAGE INCREASE OF FACTORS AFFECTING CHICAGO REAL 
ESTATE IN BOOM PERIODS 



FACTORS 


AGGREGATE PERCENTAGE INCREASE 
FOR LAST YEAR OVER FIRST YEAR 


AVERAGE INCREASE IN PER 

CENT PER ANNUM 


1833- 
36 


1842- 
56 


1861- 

72 


1885- 
92 


1918- 
26 


1833- 
36 


1842- 
56 


1861- 

72 


1885- 
92 


1918- 
26 


Population* 


I, IOO 

4,000 


1,400 
8,900 


206 
QOO 


56 
210 

214 
22 4 
1,322 
85 

118 
5i 


30 
150 

160 

954 
2,677 
dec. 13 
40 
34 

530 
90 
301 

80 


275 
1,000 


93 
593 


17 
75 


26 

24 
28 

167 

II 

15 

6 


3-3 
17 

18 

106 
297 
-i-5 
4-5 
4 

59 
10 

45 
9 


Land valuesf 


Consideration in 
deeds! 


New construction . . 
Lots subdivided || 


150 


i, 300 If 


4,900 
I, 800** 
1,290}$ 


37 




408 
1 80 

IOO 


IOO 


Manufactures ft . . . 
Bank clearings. . . 
Wholesale trade || || . . 
Amount of new trust 
deeds flf 




Gross office rents*** 
Net office rents*** 


































Rents of working- 
men's dwellings f 1 1 



















* Annual population estimates from city, state, and school censuses and local estimates. Population fig- 
ures from 1880 to 1933 estimated by the writer largely on the basis of the grade-school enrolment. 

t Computations of the writer. 

t Consideration in deeds reported in the annual reviews of the Tribune and the Economist prior to 1901. 
Number of transfers, 1901-32, from the county recorder's office. 

Value of new construction as shown by permits from the records of the Building Department of the city of 
Chicago. 

|| Area subdivided in 1933 limits of Chicago from 1830 to 1932 computed by the writer from the original 
plats in the office of the Chicago Title and Trust Co. Lots subdivided in Chicago Metropolitan Region from an 
unpublished study. 

If From 1844 to 1856. 

** From 1863 to 1872. 

ft From annual reviews of the Chicago Tribune and U.S. Census of Manufactures. 

it From 1860 to 1872. 

From a typewritten statement furnished by the Chicago Clearing House Association. 

|| || From annual reviews of the Chicago Tribune. 

ir^ From annual reviews of the Economist. 

*** From a study by James P. Hooker, "Biography of an Office Building," Real Estate, July, 1933. 

tft U.S. Bureau of Labor Statistics, op. cit., see Table LXXXVIII for full reference. 



It must also be borne in mind that the curves of aggregate land val- 
ues for the entire city smooth out the great differences between indi- 
vidual sections that were discussed in chapter vi, and that the aggre- 
gate building curve for the city lumps together all types of buildings 
for all parts of the city. There are many individual variations from the 



THE CHICAGO REAL ESTATE CYCLE 



405 



main trend of values for different areas in the city and for different 
types of uses, but the tracing of these neighborhood cycles would re- 
quire a voluminous treatment that would far transcend the scope of 
this work. 

F. STATISTICAL SUMMARY OF SEQUENCE OF FACTORS IN THE 
CHICAGO REAL ESTATE CYCLE 

Since practically all of the data for the Chicago real estate cycle are 
aggregate annual figures, the time intervals between the movements of 
the different factors cannot be measured as closely as in the case of 

TABLE LXV 

THE PERCENTAGE DECREASE OF FACTORS AFFECTING CHICAGO 
REAL ESTATE IN DEPRESSION PERIODS 



FACTORS 


AGGREGATE PERCENTAGE DE- 
CREASE FOR LAST YEAR 
OVER FIRST YEAR 


AVERAGE DECREASE IN PER 
CENT PER ANNUM 


1836- 
4i 


1857- 
61 


1873- 

78 


1892- 
98 


1926- 
32 


1836- 
41 


1857- 
61 


1873- 
78 


1892- 
98 


1926- 
32 


Land value 
Consideration in deeds 
New construction 
Lots subdivided 
Public improvements. . 
Population (increase) . . 
Foreclosures (increase) . 


86 
"56" 

100 

3i 


50.0 

QI.8 
IOO.O 

30.0 


56.0 

51-4 

83.2 

95-6 
95-6 

i5-o 
70.0 


33-o 
65.0 
69.7 
97.0 

85-3 
20. o 

220.0 


60.0 

SI-5 
99.0 
IOO.O 

82.6 

5 dec. 
900.0 


17 

II 
20 


12.5 

22.7 
25.0 


ii .0 
10.3 
16.6 
19.1 
19.1 
3-o 
14.0 


8.0 
13.0 
n. 6 
16.1 
14.2 
4.0 
37-o 


IO.O 

8.6 

16.5 
16.6 
13-8 
-1.25 
150.0 


6.2 


7-5 



monthly data. If the year in which each of the real estate forces made 
a significant turn is set down as in Table LXVI, it is important to note 
that in every cycle the curve for population increase is the first to begin 
its rise from the low point, and in three of the five cycles it was the first 
to turn down. The beginning of the upturn in real estate transfers, lots 
subdivided, and new construction takes place from one to four years 
after the first acceleration in population growth, but still within ample 
time to enable land-buyers to accumulate holdings for the boom, which 
is still eight to ten years away. The danger signal of the approach to a 
falling market is the rise in the number of lots subdivided to a point far 
above normal for the second or third year in succession. It is almost 
necessary for the real estate investor, who desires to avoid the possi- 
bility of loss or of a long waiting period, to sell out a number of months 



406 



ONE HUNDRED YEARS OF LAND VALUES 



before the peak is reached, because when the land market first slackens 
its pace and enters that "Saragossa Sea" known as "the dull period," 
it is very difficult to make a cash sale. When the decline in the real 

THE CHICAGO REAL ESTATE CYCLE 



LAND VALUE' 1=15,000,000 

NEW BUILDINGS: 1^? 200,000 

TRANSFERS: 1= 1,000 

LOTS SUBDIVIDED: 1= 200 

SPECIAL ASSESSMENTS: I = 20O 




FIG. 97 



estate factors begins, it drags out its course on the average from five 
and a half to eight and one-fifth years before it hits bottom. The lack 
of short selling, the tenacity with which owners cling to their mortgaged 
homes or apartments, and the slow and cumbersome process of fore- 
closure, which requires about two years in Illinois, prolong the agony 
far beyond the short shift allowed margin holders of stocks. After the 



THE CHICAGO REAL ESTATE CYCLE 407 

liquidation is completed, there is usually no quick rebound as in the 
case of stocks or commodities. While there may be a mild recovery in 
income-producing property, it may require a lapse of from eight to 
thirty years before the way is prepared for another land boom. The ex- 
perience of the Chicago real estate cycle, showing the probable expect- 
ancy of life of each of the factors in their various phases, is presented in 
Tables LXVI and LXVII. 

So far the Chicago real estate cycle has been considered as a phenom- 
enon isolated from the rest of the United States. No satisfactory com- 
parison can be made between the real estate cycle of Chicago and the 
cycles of other cities, because comparable data on all aspects of the 
cycle do not exist. 27 If the phases of the real estate cycle depend largely 
upon the acceleration in the rate of population growth, as herein con- 
tended, then since the rate of growth of different cities between decen- 
nial periods varies greatly, marked local differences in these cycles may 
be expected. Only careful studies of population growth between census 
years and land values in other cities could furnish the evidence for such 
a comparison. 

G. THE CHICAGO REAL ESTATE CYCLE COMPARED WITH THE GENERAL 
BUSINESS CYCLE IN THE UNITED STATES 

i. The magnitude of the oscillations. The range of fluctuations in 
Chicago land values has on the average been considerably greater than 
that of wholesale commodity or rail-stock prices. 28 The great rises in 
wholesale prices during the Civil and the World wars; the rail-stock 
booms culminating in 1853, 1881, an( ^ 1906; and the industrial stock 
upturn ending in 1929 have alone been comparable in magnitude to the 

2 7 For a general journalistic account of land speculation in other cities in the United 
States from colonial times to the present see A. M. Sakolski, The Great American Land 
Bubble (New York, 1932). For a study of land values in New York City from 1905 to 1929 
see Edwin H. Spengler, Land Values in New York in Relation to Transit Facilities (New 
York: Columbia University Press, 1930). For a description of the real estate cycle in St. 
Louis in which statistics on rent and marriage rates are presented see Delbert A. Wentz- 
lick, Journal of the American Institute of Appraisers, January, 1933. For a description of 
some phases of the real estate cycle in San Francisco see Lewis A. Maverick, "Cycles in 
Real Estate Activity," Journal of Land and Public Utility Economics, IV, No. 4 (November, 
1928), 405. For a study of subdivision activity in other American cities see Ernest M. 
Fisher, Subdivision Activity in Nine Suburban Areas ("University of Michigan Business 
Studies," Vol. I); see also Fisher, "Speculation in Suburban Lands," op. cit., p. 153. 

* See Table LXVIII. 



4 o8 



ONE HUNDRED YEARS OF LAND VALUES 



TABLE LXVI 

SEQUENCE OF FACTORS IN THE CHICAGO REAL ESTATE CYCLE, AS INDICATED BY 
DEVIATIONS ABOVE AND BELOW THE NORMAL TREND 



Factors 


Rise 
Begins 


Peak or 

Year of 
Maximum 
Deviation 
above 
Normal 


Decline 
Begins 


Cross Nor- 
mal Line on 
Way Down 


The Bottom 
or Year of 
Maximum 
Deviation 
below 
Normal* 


Population . . 


Cycle I, 1830-42 


1831 

1830 
1832 


1834 

1836 
1836 


1835 

1837 
1837 


1837 

1838 
1840 


1838 

1838-44 
1842 


Lots subdivided, Chicago, 
1933 limits 
Land values 

Population 


Cycle II, 1842-61 


1839 
i854t 

1844, 1851 
1843 


1853 
1857 

1856 
1856 


1854 
1858 

1857 
1857 


1856 
1859 

1858 
1858 


1858 
1862 

1861 
1865 


New construction 


Lots subdivided, Chicago, 
1033 limits. . 


Land values 
Population 


Cycle III, 1861-79 


1858 
1863 


1872 

1869 
1872 
1872 
1869 


1873 

1870 
1873 
1873 
1872 


1873 

1876 

I87S 
1874 

1875 


1875 

1880 
1879 
1874 
1878 


Lots subdivided, Chicago, 
1033 limits 


Real estate transfers f 


New construction 


1863 
1866 


Land values 
Population 


Cycle IV, 1877-97 


1877 
1881 

1878 
1880 
1882 
1879 


1882, 1891 
1890 

1891 
1890 
1892 
1891 


1892 
1891 

1892 
1891 

1893 
1892 


1893 
1892 

1893 
1896 

1893 
1895 


1896 
1900 

1899 
1898 
1900 
1897 


Lots subdivided, Chicago, 
1933 limits ; ^ 
Lots subdivided in Chicago 
Metropolitan Area 


Real estate transfers 


New construction 


Land values 





* Present depression not over in 1933. 
t No data before 1854. 
| Data begins in 1869. 



THE CHICAGO REAL ESTATE CYCLE 

TABLE LXVI Continued 



409 







Peak or 






The Bottom 


Factors 


Rise 
Begins 


Year of 
Maximum 
Deviation 
above 


Decline 
Begins 


Cross Nor- 
mal Line on 
Way Down 


or Year of 
Maximum 
Deviation 
below 






Normal 






Normal* 




Cycle V, 1917-33 


Population 


1918 


1924 


1925 


1926 


1932 


Lots subdivided, Chicago, 












1933 limits 


IQ2O 


1026 


1027 


1927 


1930 


Lots subdivided in Chicago 












Metropolitan Area 


1919 


1926 


1927 


1929 


1931 


New construction 


1910 


1925 


1926 


1930 


1932 


Land values 


1920 


1925 


1926 


1931 


1933 


Real estate transfers 


1918 


1925 


1926 


1929 


1932 





Summary: Time Sequence of Factors in Real Estate Cycle; Number of Years 
Each Factor Follows the Movement of Population 



Real estate transfers 
New construction 


2.67 
j. 67 


o-5 

I e 


I .O 
I . C 


2.6 7 
2.O 


2.O 
I . C 


Land values 


3 6 


I . 2 


I . C 


2.8 


3-2 


Lots subdivided in Chicago 
Metropolitan Area ....... 
Lots subdivided, Chicago, 
1933 limits 


i .0 
4-5 


I.O 
2.O 


i-5 

2.O 


2-5 
I . 2 


2.6 7 
2.6 















TABLE LXVII 
AVERAGE TIME INTERVALS IN THE CHICAGO REAL ESTATE CYCLE (YEARS) 



Factors 


From Beginning 
of Rise to Peak 


From Peak to 
Crossing Normal 
Line on Way Down 


From Peak 
to Bottom 


Population 


12 O 


2 2 


4 8 


Lots subdivided, Chicago, 1933 
limits 
Lots subdivided in Chicago Metro- 
politan Area 


8.0 

IO O 


2.8 
2 < 


8.2 
6.5 


Real estate transfers 
New construction 
Land values 


8.5 
8.3 

7-4 


4-3 
2-5 
4-4 


7-5 
5-5 
7.6 











4io 



ONE HUNDRED YEARS OF LAND VALUES 



land booms. 29 The differences between the oscillations of the indices of 
Chicago real estate activity and those of other forms of local and of 
general American business movements are far more extreme. In an en- 
tire century there has been no single year in which general American 
business activity, according to the Ayres chart, has averaged more than 
1 6 per cent above normal. In the last sixty-seven years the extreme 
rise of Chicago bank clearings has carried the curve only 28 per cent 

CHICAGO PER CAPITA LAND VALUES COMPARED WITH WHOLESALE PRICES, WAGES 
OF UNSKILLED LABOR AND RAIL STOCK PRICES IN THE UNITED STATES 

1831-1933 



<0i0r-r-oo0a> 
o co o to <o <o <o 




FIG. 98 

above the trend line, and in the period from 1875 to the present the 
high point of Chicago manufactures has been only 20 per cent above 
normal. 30 These rises appear moderate, indeed, when compared with 
the advances in the factors that measure real estate activity. Even the 
index of real estate transfers, which fails to register the full volume of 
sales at the peak, has attained a maximum of 131 per cent above nor- 

2 ' See Fig. 102. In this figure the wholesale commodity price cycle has been computed 
from the indices of Professors G. F. Warren and F. A. Pearson. The canal-rail stock index 
is the one used by Leonard P. Ayres, in his chart, "American Business Activity and Four 
Price Series." Industrial stock prices are from Warren M. Persons, Forecasting Business, 
and are brought down to date by the Dow- Jones figures. 

* See Table LXVTII and Figs. 99, 100, and 101. 



PERCENT 



eeei 




XN3 D H 3 d 



412 



ONE HUNDRED YEARS OF LAND VALUES 



mal. 31 The highest peak of new construction in the period since 1854 
looms above transfers with an elevation of 167 per cent above the trend 
line. 32 All the other increases are dwarfed by the precipitous ascents in 
the volume of lots subdivided which in booms have reached altitudes 
as high as 540 per cent above the normal plain. 33 Subdivision activity 
is thus the most sensitive and volatile measure of a land boom. 

THE CHICAGO LAND VALUE AND REAL ESTATE TRANSFER CYCLES 

COMPARED WITH THE CYCLE OF CHICAGO MANUFACTURING 

1866-1933 




The decline of American business activity below normal in depres- 
sions is more pronounced than the rise during periods of prosperity. 
For the year 1932 the Ay res index shows an average recession of 41.6 
per cent below normal, and for the same year Chicago bank clearings 
were 52 per cent below the trend line. 34 It would seem that dips as ex- 

3 1 See Fig. 100. Real estate transfers do not show the heavy sales of lots on instalment 
contracts during boom periods, and in depression periods they are padded by master's 
deeds to avoid foreclosure, exchanges, and deeds recorded on transactions made several 
years before. 

3* See Fig. 99 and Table LXVIIL 

33 This figure is for lots subdivided in the Chicago Metropolitan Area. See Fig. 101 and 
Table LXVIII. 

u See Figs. 99 and 101 and Table LXVIII. The decline in Chicago bank clearings may 
be exaggerated by the fact that so many outlying banks closed from 1929 to 1933. 



PER CENT 








J.N30 b3d 



THE CHICAGO REAL ESTATE CYCLE 



treme as these would not be exceeded by the fall in real estate activity. 
Ruling out of consideration real estate transfers for the reasons already 
given, the indices of real estate activity do manage to decline even more 

TABLE LXVIII 

A COMPARISON OF FLUCTUATIONS OF CHICAGO REAL ESTATE FACTORS ABOVE AND 
BELOW NORMAL WITH FLUCTUATIONS IN GENERAL BUSINESS FACTORS 



FACTORS 


PERCENTAGE 
MAXIMUM 
DEVIATION 


PERCENTAGE 
AVERAGE 
DEVIATION 


MAXIMUM 
LENGTH or 
PERIOD (YEARS) 


AVERAGE 
LENGTH or 
PERIOD (YEARS) 


PER 

CENT 
OF EN- 
TIRE 
PERIOD 

ABOVE 

NORMAL 


Above 
Normal 


Below 
Normal 


At or 
above 
Normal 


Below 
Normal 


At or 
above 
Normal 


Below 
Normal 


At or 
above 
Normal 


Below 
Nor- 
mal t 


Business activity in 
U.S., 1830-1932,* 
monthly 


21 
16 
35 

28 
60 

92 
131 

167 

456 
330 

540 


47-2 
4 I.6 
19 
52 
60 

40 

43 
98 
80 

IOO 
100 


6.2 
5-i 
8-7 
8-5 
16.4 

26.0 
29.0 

45-5 
58-4 
128.5 

134-9 


8-5 
7-5 
8-5 
12.3 
17.0 

18.1 

21.8 

34-6 
30.0 
62.0 

55-6 


3-5 
7 
8 

12 

8 

15 

9 

8 

9 
9 

7 


5.83 
6 

5 
6 

9 
39 

12 

9 
26 
18 

19 


i-73 
3-o 
3-2 
5-4 
3-8 

10. 

3-6 
3-4 
6.0 

3-9 
5-3 


1.65 
2.0 

2-55 
3-8 
4-3 

16.2 
6.1 

3-7 
16.3 
7-8 

12.7 


57-0 
58.8 

53-5 
60.0 

48.5 

42.1 
41.0 
46.2 
29.0 
32.3 

28.3 


Business activity in 
U.S. annually* 


Chicago value of manu- 
factures, 1872-1931 . 
Chicago bank clear- 
ings, 1866-1932 
Canal-rail stock prices, 
18311932 


U.S. wholesale com- 
modity prices, 1831- 
1932 


Chicago real estate 
transfers, 1872-1932 
Chicago new construc- 
tion, 1854-1932. . . . 
Chicago land values, 
18301933 


Area subdivided in 
Chicago, 1830-1933 
Area subdivided in 
Chicago Metropoli- 
tan Area, 1874-1933 



* Chart of Leonard Ayres of the Cleveland Trust Co. The annual figures are annual averages of the Ayres 
figures. 

t Periods below normal at the beginning or end of each series of data omitted, because the full length of the 
subnormal period was not determined. 

precipitously than those measuring the general volume of business, for 
they fall 98 per cent below normal in the case of new construction and 
to absolute zero in the case of lots subdivided. In a depression a certain 
minimum of industrial activity is necessary to supply the population 
with food, some restricted requirements of clothing and luxury articles, 
and to maintain a skeleton organization for plants with no immediate 



416 ONE HUNDRED YEARS OF LAND VALUES 

business. Hence it is not possible for all American industrial activity to 
be suspended even in the worst business years. Nor can all forms of real 
estate activity be closed down even for a short time. People must rent 
houses and apartments; properties must be managed, decorated, heat- 
ed, and supplied with janitor service; and roofs must be kept from leak- 
ing. It is possible, however, to stop building any new structures for a 
time and to cease making any additional investments in vacant lots. 
All speculation in real estate can come virtually to a standstill when 
the foreclosure mill is grinding away. Even then courts, lawyers, and 
receivers are busy, but their activity is of a nature that profoundly dis- 
courages people from acquiring more real estate. Short selling might 
maintain some semblance of a market, if it were possible to group real 
estate lots into standard units, with a sufficiently large supply of each 
grade to insure the probability that someone would always be willing to 
sell a lot at a reasonable price. As any such development is extremely 
unlikely because of the diversified nature of real estate, it would seem 
that the land and buildings which comprise over half of our national 
wealth are commodities of such a nature that in a few brief intervals can 
be sold at extravagant figures and that in other long periods cannot be 
converted into cash at all save at a tremendous sacrifice. While the 
lack of a stable and continuous market is particularly noticeable in the 
case of vacant lots on the fringe of a city, the same situation with re- 
spect to marketability applies to a less degree to properties even in the 
heart of central business districts of large cities. This defect could be 
remedied to a large extent in the case of income-producing holdings by 
a more stable and consistent lending policy on the part of banks and 
financial institutions. If money could be borrowed at all times on a 
conservative basis, or valuations established by earnings over a long 
period of years, instead of upon the vagaries of booms and depressions, 
a powerful stabilizing force would be exerted upon the real estate mar- 
ket. It is true that the rapid shifts in population that have occurred not 
only within the United States but within American cities, and the revo- 
lutionary shifts in the character and the intensity of land utilization, 
have made the calculation of long-run trends of earnings extremely diffi- 
cult, if not impossible. The problem of the lack of stable markets for 
real estate may be solved by a slackening of population migrations and 
of the rate of population increase in the United States. 



THE CHICAGO REAL ESTATE CYCLE 417 

2. Duration of the Chicago real estate and general business cycles. 
From 1830 to 1933 there have been only five land booms in Chicago, 
but, on the other hand, there have been only two great rises in com- 
modity price levels and only about five extraordinary booms in rail and 
industrial stocks in that period of a little over a century. 35 There have 
been more numerous minor movements in stocks and commodities than 
in the fluctuations of aggregate Chicago land values, but there have 
been local and neighborhood movements in Chicago that are smoothed 
out by the general average for the whole city. The exceptional specu- 
lative movements in land, commodities, and stocks are separated by 
long intervals of time, and there is no definite period of years between 
one boom and the next. Chicago land booms have occurred less fre- 
quently since 1873 than before, until thirty-five years elapsed from the 
hectic land market of 1890 to that of 1925. If it be considered that the 
speculation of 1890 was chiefly confined to the central business district 
and the South Side and that the North Side was but little affected by it, 
then in some sections a valley of the fifty- three years from 1872 to 1925 
intervened from one peak to the next. Of course, there was a steady 
rise in land values on the North Side from 1900 to 1920, even before the 
last exuberant wave of buying that carried all Chicago land values to 
their all-time peak. In fact, the length of the ensuing depression seems 
to be measured by the shadow of the preceding peak. After the wild 
speculation south of the World's Fair grounds in Chicago, from 1890 to 
1893, there was no widespread upturn in values for thirty years, 36 while 
at the same time the people on the North Side, which was suffering 
from no such aftermath, were witnessing a slowly rising land market. 

a) The long periods of depression in Chicago real estate. The periods 
of activity above normal for Chicago real estate factors are much short- 
er than the periods of depression. The very fact that the peaks go so 
far above the normal line when they do occur necessarily requires either 
deep valleys or long intervals of slightly below normal activity or both 
combined. Chicago land values have remained below normal for as 
long as twenty-six years in a stretch, and the minimum period under 
the trend line was ten years. In fact, Chicago land values and Chicago 

35 See Fig. 102. 

& In the vicinity of Eighty-seventh and Jeffery Avenue, there were in some cases no 
transfers between 1890 and 1922. 



4i8 ONE HUNDRED YEARS OF LAND VALUES 

subdivision activity have been above normal only about 29 per cent of 
the time. 37 New construction activities make a better showing, but 
still the volume of new building is depressed over half the time. 38 

The long periods of depression in real estate are in sharp contrast 
with the situation in general business. The longest period of subnormal 
activity, that in the seventies, lasted only six years, according to the 
Ayres chart, and the average period below normal lasted only three 
and a half years even when the data are computed on an annual basis. 
If monthly variations in business be considered, the average duration of 
a subnormal business period was only one and sixty-five one-hundredths 
years. American business activity, Chicago bank clearings, and Chi- 
cago manufactures have been above normal 59.60 and 53 per cent, re- 
spectively, of the time. 39 

General American business activity dips much more frequently above 
and below the normal line than Chicago land values or subdivision ac- 
tivity. Whereas in the period from 1830 to 1933 American business rose 
above normal approximately thirty times, land values advanced above 
this line only five times and lots subdivided twelve times. Since 1875 
American business activity has had fifteen separate periods of pros- 
perity interrupted by recessions below normal, but since that time there 
have been only two periods when land values, four times when lots sub- 
divided, five times when real estate transfers, and six times when new 
construction were above normal. 40 The long periods of subnormal ac- 
tivity in the case of the real estate factors again illustrates the lack of 
a continuously active land market. 

3. The relationship of wage and interest rates to the land-value cycle. 
In considering the relationship of land values to other general price 
movements in the United States, it is important to consider the course 
of wages and of interest rates. 41 Wage rates affect construction costs 
to a far greater extent than commodity prices, for a considerable pro- 
portion of the cost of a building is in the form of direct wage outlays 
for the work at the site or for the production of the building materials. 
A rise in commodity prices, however, does lead to a delayed advance in 
wage rates, which gain is mostly retained even after the decline in the 

37 See Table LXVIII. 

3 8 The percentage of time below normal is 53.8 per cent. 

39 See Table LXVIII. 4 See Figs. 99, 100, and 101. 
<x See Figs. 78 and 98 on pp. 349 and 410. 



THE CHICAGO REAL ESTATE CYCLE 419 

price level. As a result, construction costs are permanently higher after 
an upheaval in commodity prices, and there is an appreciation in the 
value of old buildings which gives rise to speculation. A decline in in- 
terest rates affects land values through the capitalization rate. A fall 
in the rate of interest on mortgages in the central business district of 
Chicago from 10 to 4 per cent between 1856 and 1896, which in turn re- 
flected the effect of the declining yield on bonds, was one of the most im- 
portant factors in the rise in land values in the business center of Chi- 
cago in that period. 

4. The sequence of the real estate and the commodity and stock cycles: 
a) The valleys coincide but the peaks do not. A comparison of the Chi- 
cago land- value cycle with the cycles for wholesale commodity prices 
in the United States, canal-rail stock prices and industrial stock prices, 
as shown by Figure 102 and Tables LXIX and LXX, indicates that 
peaks for these series occur at widely divergent points but that the 
points of maximum depression for all of them come almost at the same 
time. Thus if Chicago land values be compared with wholesale com- 
modity prices, the land values rose during two periods of rising prices, 
two periods of falling prices, and one period of stationary prices. The 
peak in land values was attained five years after the great peaks of 
wholesale commodity prices in 1864 and 1920. If the comparison be 
made between Chicago land values and canal-rail or industrial stock 
prices, it is to be observed that stock prices reached their peak one year 
before the land- value peak of 1836, three years before the land- value 
top of 1856, and four years after the land- value maximum of 1925. In 
other periods there was no agreement between speculative movements 
in land and stocks. There was no Chicago land boom in 1881 and 1906 
that corresponded with the rise in stocks; there was no upturn in stocks 
from 1869 to 1873 or from 1889 to 1892 that corresponded in magni- 
tude with the sharp advance in land values. 

On the other hand, while the peak points of the speculative indices 
rarely coincide, their maximum depression points show a far greater 
degree of agreement. The trough of the depression for Chicago land 
values, stock prices, and wholesale commodity prices came in the peri- 
ods 1841-42, i859~6i, 42 1877-79, 1896-98, 1920^21, and 1932 or 1933. 
It requires varying periods of time for each set of factors to reach new 

" 2 Chicago land values were at their absolute low points in 1861, although the maximum 
low point according to the deviation from the normal trend came in 1865. 



420 



ONE HUNDRED YEARS OF LAND VALUES 



peaks after each valley, but in certain major depressions they all reach 
bottom at about the same time. 

b) Commodity, land, and stock speculations do not come together but 
alternate. It is a striking fact that the greatest speculative movements 
in wholesale commodity prices, Chicago land values, and rail and in- 
dustrial stocks have not concurred but have alternated, in point of 

TABLE LXIX 

YEAR IN WHICH MAJOR PEAKS OCCURRED IN CHICAGO LAND VALUES COMPARED 

WITH MAJOR PEAKS IN WHOLESALE PRICES, CANAL- RAIL STOCK PRICES, 

AND INDUSTRIAL STOCK PRICES 





1830-42 


1842-61 


1861-79 


1879-98 


1898- 
1917 


1917-33 


Chicago land values 


1836 


1856 


1860 


1801 


* 


IO2C 


Canal-rail stock prices 
Industrial stock prices 


1835 


1853 


i86 9 f 


1881 
1881 


1906 
1006 


1929 
1929 


Wholesale commodity prices 


i8 3 6f 


1855, i8s?t 


1864 








I92O 



* No major peak. 



t Not a predominant peak. 



t No data. 



No peaks. 



TABLE LXX 

YEAR IN WHICH THE MAXIMUM POINT OF DEPRESSION OCCURRED FOR CHICAGO 
LAND VALUES COMPARED WITH MAXIMUM DEPRESSION POINTS FOR WHOLE- 
SALE PRICES, CANAL- RAIL STOCK PRICES, AND INDUSTRIAL STOCK PRICES 





1830-43 


1843-66 


1866-79 


1879-99 


1899-1921 


1921-33 


Land values 


1842 


186-; 


1878 


1898 


IQ2O 


IQ33 


Canal-rail stock prices 


1842 


l8<?Q 


1877 


1807 


IQ2I 


IQ32 


Industrial stock prices . . 






1877 


1807 


IQ2I 


IQ32 


Wholesale commodity prices 


1841 


1861 


1879 


1896-97 


1899, 1921 


1932 



time, since the Civil War. 43 In both the Civil and the World wars, there 
was an extraordinary demand from Europe for American foodstuffs and 
for American mineral products that was added to the civilian and mili- 
tary requirements of the United States. This exceptional demand 
caused a rapid rise in many of the components of the commodity price 
index and it also caused labor and capital to be concentrated on the 
production of the kind of goods for which there was such imperative 
need. The demand for housing and for comfort or luxury articles was 

* See Fig. 102. 



THE CHICAGO REAL ESTATE CYCLE 421 

held abnormally low during these war periods. With the cessation of 
war and the return of normal agricultural production in Europe, the 
abnormal demand for American farm products declined and the whole- 
sale commodity price index fell. The return of soldiers and sailors to 
their homes and the influx of the rural population into the industrial 
centers, however, created in turn an abnormal need for the residential 
accommodations, whose increased supply had been held back by the 
war-time regulations of industry and by the high profits of war indus- 
tries. This led to a rise in rents and to a land boom. Finally, when the 
housing shortage was made good, the demand for automobiles, radios, 
and manufactured articles supplying the comforts of life or luxurious 
tastes increased the profits of industrial plants and led to booms in the 
common stocks of these companies. 

Thus the lack of a balanced demand for foodstuffs, housing, and 
other manufactured articles has alternately speeded up prices and 
production in farm products and agricultural land, in the construction 
industry and urban land, and in manufacturing plant and capital goods. 
While one part of the economic system was stressed, other parts were 
neglected, so instead of an even and equal flow of production, there was 
an alternation of booms and depressions. 

c) The advantage of a source of liquid capital for real estate operators. 
The fact that speculation alternates from commodities to urban lands 
and to stocks suggests that the movement of each may be enhanced by 
the concentration of funds upon each in turn instead of the diffusion of 
capital over all of them at the same time. Speculators who have reaped 
large profits in the rise or fall of commodity prices may do as Potter 
Palmer did and invest in land. It is significant to note that some of the 
largest fortunes in real estate have been made by men who were not 
primarily real estate operators. John Jacob Astor acquired his liquid 
capital in the fur trade, Marshall Field accumulated large savings from 
wholesale and retail trade, and Potter Palmer had interests in trade 
and in his hotel that furnished him with ready funds. Real estate is 
not a liquid asset in a depression, and in these recurring periods of sub- 
normal business activity it is almost impossible to refinance even a con- 
servative loan upon land and buildings. Hence some of the largest real 
estate owners, who had no other business or fund of capital to draw 
upon r lost all their holdings by foreclosure because of their inability to 
renew the mortgages upon their properties. 



422 ONE HUNDRED YEARS OF LAND VALUES 

d) Speculators tend to stick to the game they know best. Switching back 
and forth from real estate investments to those in commodities and in 
stocks or bonds is probably not a common practice, however, because 
investments in real estate are difficult to liquidate and because the 
methods of buying and selling land are of such an altogether different 
nature from trading in stocks, bonds, or commodities that speculators 
familiar with the technique of one kind of market are utterly lost in the 
other. Some land speculators confine their activities entirely to one 
neighborhood or section of one city, or to one type of property in that 
city, and while some speculators follow land booms from city to city, 
there are probably not very many who alternately trade in commod- 
ities, land, and stocks. 

e) The public is swayed by the prevailing crowd psychology. If the 
same persons do not change from one type of speculation to another, 
there are always newcomers or members of the general public who are 
ready to embark upon any form of enterprise that promises quick 
profits. When agricultural land speculation or commodity speculation 
is rife, they enter that field, but if an urban land boom is sweeping their 
city when they have funds to invest, they will buy lots. If stock specu- 
lation is uppermost in the public mind, these same people will buy 
stocks on margin. Sometimes the same persons may enter the different 
speculative fields in turn, but frequently the field first entered is their 
last, for they either lose their money and are deterred from all specu- 
lative ventures of any kind thereafter or make profits and are inclined 
to stick to the same form of speculation with which they have become 
familiar. In all events, the concentration of speculative capital upon 
each of these fields in turn causes them to reach greater heights than if 
the same funds were distributed among several forms of speculation. 

/) The delayed effects of a great war. The interrelationships between 
the various parts of the economic mechanism are thus illustrated by the 
delayed reaction of commodity-price upheavals upon land booms. The 
emphasis which the economic system put upon the production of food- 
stuffs and war materials from 1914 to 1919 with the consequent world- 
wide rise in commodity prices caused an abnormal curtailment of con- 
struction work, which in due course led to a stressing of the production 
of housing facilities and to excessive activity in that direction. It seems 
that the dislocations of the normal flow of economic activity caused by 
great wars produce a series of speculative tidal waves that do not sub- 



THE CHICAGO REAL ESTATE CYCLE 423 

side until years after the echo of the last cannon shot has died away. 
There are, of course, many other causes that disturb the balanced dis- 
tribution of productive effort, and it is possible that the economic sys- 
tem would generate a wavelike motion within itself if such cataclysmic 
influences such as wars were ruled out of consideration. In actual his- 
toric surveys, however, the ordinary course of events is intermingled 
with extraordinary occurrences that interact violently upon the other 
elements, so that the actual fluctuations reflect the combined influence 
of both the normal and the abnormal events. Two great land booms in 
Chicago occurred during post-war booms, but three others took place 
without such a stimulus, so that no catastrophic theory of business 
fluctuations is sought to be propounded here. 

H. REAL ESTATE CYCLES MAY BE A PASSING PHASE 

The real estate cycle itself may be a phenomenon that is confined 
chiefly to young or rapidly growing cities. An ancient city may have a 
land boom if it becomes like Warsaw, the political capital of a new 
state, but if rapid rises or declines in land values become of rare occur- 
rence in older or more stable societies, the sequence of events just de- 
scribed may in the future be of interest only to historians delving in the 
habits and customs of "early machine age culture in the United 
States," and the knowledge of the mode of behavior of forces in the real 
estate cycle will have no value in forecasting the trend of future events. 
The long and uncertain duration of the cycles described in this book 
in itself makes practical application of any of the precepts that may 
have been disclosed herein difficult, for one must live long and be gifted 
with extraordinary patience to wait for an opportunity that knocks on 
the door not oftener than once every twenty or thirty years. 



APPENDIXES 



APPENDIX I 
THE CHICAGO LAND MARKET 

A. THE LACK OF HOMOGENEITY OF CHICAGO LOTS 

In the main body of this study, aggregate land values of the entire city or large 
sections have been the principal subject matter. The methods by which total values 
for each square-mile area were determined were not discussed and the difficulties in 
the summation process were therefore not revealed. If the lots in each section 
were of a homogeneous character, the sample sales of a few might establish the 
value of all, but it is well known that no two urban lots are exactly alike, and hi the 
case of Chicago the differences are extreme. Of the 740,512 lots within the city 
limits in 1928, the range in values was from $5.00 to $50,000 a front foot. 

This lack of uniformity between Chicago lots not only imposes limitations upon 
computations of land values in a given year, but it causes even greater difficulties in 
determining the trends of values through a series of years. There are not enough 
land units of the same kind and character to establish a continuous market, and 
sales in many sections are at times infrequent and far between. As a result of this, 
interpolations and estimates must be made, even when all the sales data are avail- 
able. 

In this appendix, not merely the differences but the causes or the kinds of 
differences between Chicago lots will be considered. If each lot were as unique as 
an old painting or the last remaining specimen of an issue of postage stamps, there 
would be no common or general market at all, but each lot would be sui generis , or 
a law unto itself. It is the fact that the individual parcels, notwithstanding their 
unique qualities, are linked together by certain differentials that makes it possible 
to form the concept of a Chicago land market as an entity. The differences in lots 
according to the purpose for which they are used have already been discussed, but 
three main groups of factors causing variation in individual lot values remain to be 
treated. These are, first, differences in lot and block size and location with respect 
to corners as determined by the layout of the original subdivision; second, differ- 
ences in title caused by acts of the owner; and, third, differences caused by varia- 
tions in control by community and governmental units. 

i. Layout of the original subdivision lot and block size: depth-rule and corner- 
influence factors. The size of the block, and also to a large extent the depth and 
width of individual lots within the block, are often irrevocably determined by the 
subdivider who first plats a raw acre tract or farm into town lots. It is true that if 
few or none of the original lots are sold, and if no development in the form of build- 
ings or street improvements takes place, the entire subdivision may be "vacated" 
or turned back into farm land. Thus the early subdivisions in Chicago, such as 
Canalport, Calumet, George, and Cottage Grove, that were laid out in 1836 with 

427 



428 



ONE HUNDRED YEARS OF LAND VALUES 



their lots oriented toward the lake or the Chicago River were thus vacated and an 
entirely different pattern of streets later superimposed over the old plan. When 
some part of a subdivision is sold and a few houses are built in it, however, it be- 
comes extremely difficult to consolidate the tract again under one ownership and to 
lay out the streets and the blocks in a different way. After the street improvements 
are installed, it would also be very expensive to alter the original plan. Thus the 
original block measurements of the Chicago "Loop" and the near North and West 
sides of Chicago have never been materially changed. 

Since, as will be noted later, urban lots do not necessarily have a uniform square- 
foot value regardless of their width, depth, and shape, the maximum aggregate lot 
value that can be derived from a given acre tract varies with the lot and block 
plan. As the size of lot that may yield the maximum value at one time may cease 
to represent the best layout for the highest land utilization of another period of 
time, some sections of the city may lose part of their land value because the size of 

TABLE LXXI 

LOT AND BLOCK DIMENSIONS OF ORIGINAL SUBDIVISIONS IN OR 
NEAR THE PRESENT LOOP 



Name of Subdivision 


Typical Block 
Size (Feet) 


Lot Width 
(Feet) 


Lot Depth 
(Feet) 


Street Width 
(Feet) 


Original Town 


320X360 


80 


1 80 


80 


Kinzie 


218X300 


CQ 


IOO 


74. 


Carpenter 


2^0X34.1 


CQ 


ISO 


66 













their land units has become obsolete and cannot readily be changed. Therefore it 
becomes important to consider briefly the history of lot and block plans in Chicago. 

The Chicago plain, in common with most of the Western United States, was 
surveyed in mile-square sections, which in turn were cut into four square quarter- 
sections and thus sold to settlers. Subdividers found it convenient to adopt a 
rectangular block plan in cutting up these quarter-sections, and such a layout was 
virtually forced upon them when the one-hundred-and-sixty-acre tracts were 
divided into four square "forties," or into sixteen square ten-acre parcels. Except 
for the circular plan of Norwood, practically the only deviations from the rec- 
tangular lot and block plan of Chicago are caused by the radial and axial highways 
which cut across section lines at oblique angles and create many triangular and 
truncated lots along their route. 

The first Chicago subdivisions from 1830 to 1837 provided mostly short, almost 
square, blocks, which meant as many as fourteen to eighteen streets to the mile in 
both directions. Table LXXI shows the plan of part of the present Loop and part 
of the near North and West sides which has persisted to this day. Some of the 
other subdivisions of 1836-37 that were later vacated provided blocks with a length 
of twice the width, as Table LXXII shows. The typical lot width of 50 feet of that 
period was considered necessary to provide for a "garden home." 



APPENDIXES 



429 



In the subdivisions in the next boom, or from 1848 to 1858, the typical lot width 
was still 50 feet, with a depth of 150-160 feet, as shown by the subdivision of Hyde 
Park. Extreme lot depth was absolutely necessary for an aristocratic residential 
development at this time, for the carriage and servant's quarters were in the rear of 
the mansion itself. Hence the 6oo-foot square blocks of Kenwood allowed lot 
depths of 300 feet. In the subdivisions from 1866 to 1873 also, the districts in- 
tended for fashionable occupancy, such as Ashland and Drexel boulevards, were 
provided with wide streets and deep lots. 

In the boom from 1866 to 1873 the block size that has since become the typical 
block unit for Chicago made its appearance. This was the 6oo-by- 2 66-foot block 
with a 66-foot street and a i6-foot alley, which made possible lot depths of 124 or 
125 feet. The long sides of these blocks usually ran north and south, so that there 
are generally eight blocks to the mile going north and south in Chicago and sixteen 
blocks to the mile going east and west. At the same time the width of the typical 

TABLE LXXII 
LOT AND BLOCK DIMENSIONS OF OUTLYING SUBDIVISIONS OF 1836-37 



Name of Subdivision 


Typical Block 
Size (Feet) 


Lot Width 
(Feet) 


Lot Depth 
(Feet) 


Width of 
Street (Feet) 


Calumet- George 


200X400 


en 


IOO 


60 


Canalport 


200X400 


co 


IOO 


66 


Cottage Grove 


200X400 


(TQ 


IOO 


66 


Duncan's 


266X600 


e;o 


12"? 


66 













lot was reduced from 50 to 25 feet, so that a lot 25 by 125 feet was the usual unit 
in the subdivisions from 1868 to 1900. Beginning about 1910, the ordinance re- 
quiring windows to be set back 3 feet from the lot line and the increasing construc- 
tion of two-flat buildings that were three or four rooms deep made necessary a 
greater lot width to provide for sufficient light and air. Residential lots in new sub- 
divisions after 1910 had a width of 30 feet, and old subdivisions not built up were 
frequently resubdivided into lots of the new width. The prevailing depth of 125 
feet and the width of 25 feet for business lots were not changed, however. Because 
of the new requirements, a residential lot with a width of only 25 feet had a value 
of less than one-half that of a 3O-foot lot in a similar location, because it could be 
used only with difficulty. 

Having thus considered the historical development of Chicago lot and block 
plan, the question now arises as to how the variation in these plans affects the ag- 
gregate value of a given quarter-section of land. This involves a discussion of depth 
rules and corner-influence tables. 

In the matter of depth rules, it was recognized by Hoffman as early as 1866 that 
the front half of an urban lot was worth more than the rear half. Nearly every city 
has a different rule to express this difference, however, and the front half of the lot 
is valued at from 57.5 to 72.5 per cent, depending on whether the lot is in Los 



430 



ONE HUNDRED YEARS OF LAND VALUES 



Angeles, Cleveland, Baltimore, Chicago, or London. 1 These rules, based on experi- 
ence or observation in the different cities, are themselves subject to change with 
changing conditions or with more detailed and accurate analyses. For Chicago a 
separate rule has been devised by Harry Cutmore and Walter Kuehnle for tax- 
assessment purposes, which is based on thousands of Chicago appraisals and which 
takes into account not merely general conditions peculiar to Chicago but also the 
different uses of Chicago land. It is commonly known in Chicago that a front half 
of a business lot contains a greater percentage of the total lot value than the front 
half of an apartment lot because most modern stores require no greater depth than 

TABLE LXXIII 

AGGREGATE LAND VALUE UNDER DIFFERENT SUBDIVISION 
PLANS AND DEPTH RULES 



SUBDIVISION 
PLAN 


TOTAL 
FRONTAGE 


LOT 
DEPTH 


DEPTH FACTORS UNDER RULE No. 


I 


II 


III 


IV 


A . 


4,800 
7,200 
9,600 
14,400 


289 
179 
124 
69 


I . 2 
1. 08 
I .O 
0.65 


1-52 

I .2 
I .O 
0.65 


I-3I 
I. 12 
I .O 
0-74 


2-33 
1.44 

I.O 

0.56 


B 
C 
D 




SUBDIVISION 
PLAN 


TOTAL 
FRONTAGE 


LOT 
DEPTH 


AGGREGATE VALUE UNDER RULE No. 


I 


II 


III 


IV 


A 


4,800 
7,200 
9,600 
14,400 


289 
179 
124 
69 


$5,76o 

7,769 
9,600 
9,36o 


$7,296 
8,640 
9,6OO 
9,360 


$ 6,288 
8,050 
9,600 
10,656 


$11,184 
10,368 
9,600 
6,384 


B 


C ... 


D 





50 or 60 feet, while an apartment building can be extended to the full depth of the 
lot. Accordingly, the rules developed for Chicago tax-assessment purposes allow 
the front half of a business lot to be valued at 70 per cent of the total, while the 
front half of an apartment lot is valued at only 60 per cent of the total lot value. 2 

To illustrate by a concrete example, the differences in aggregate land values 
under different lot and block plans and under different uses consider the various 
modes of subdividing forty acres of land as shown by Figure 103. 

The four different lot and block plans, A, B, C, and D yield the aggregate street 
frontage shown in Table LXXIII, and the aggregate land value in each case is 
shown by multiplying the frontage by the depth factor. There are four different 
depth factors, I, II, III, and IV, Rule i being that used for residential and small 

1 Walter R. Kuehnle, Real Estate Magazine (Chicago), August, 6 1932. 

2 Real Estate Assessment Manual, Cook County, Illinois (February, 1933), pp. 21-22. 



APPENDIXES 



apartment property, Rule II for multiple-apartment or high-grade business land, 
Rule III for ordinary business property, and Rule IV being a factor that would 
regard every square foot of equal importance and which would nullify the depth 
factor. The first three rules are those applied by Harry Cutmore and Walter 
Kuehnle in the assessment of Chicago land for 1931. 

Thus, under the foregoing rules, Subdivision Plan A would yield the greatest 
aggregate value if each square foot was of equal importance, because in that plan 
the smallest percentage is taken for streets and alleys; Plan C would yield the 

VARIOUS METHODS OF SUBDIVIDING A 40 ACRE TRACT, 1320 FEET SQUARE 
ABC 



y 



FIG. 103 

maximum value for residential or apartment use; and Plan D, with the highest 
amount of street frontage, would produce the greatest value for commercial use. 
Since no entire subdivision is expected to be devoted to commercial use, but only a 
small part of it, Plan D would seldom be the best arrangement, as more would be 
lost on the shallow residential lots than would be gained on the shallow business 
lots. Of the four subdivision plans considered, Plan C, or the one most commonly in 
use today, would yield the maximum advantage to the subdivider under present 
conditions. 

In the subdivision of land for industrial use, the dedication of any streets and 
alleys to public use is considered a serious disadvantage, as switch tracks can be laid 
across public streets only by securing consent of the City Council. Therefore the 
streets necessary for ingress are retained as private thoroughfares, so that switch 
tracks may be placed across them or their route may be changed if industrial needs 
require a different plant layout. The lots used for industrial purposes should be 



43 2 



ONE HUNDRED YEARS OF LAND VALUES 



deep enough to permit a switch track with a radius of at least 250 feet or else shaped 
to permit the entry of a switch track on an angle, as the accompanying diagram 
shows. 




RAILROAD TRACKS 
LOT LINES 

The aggregate value that may be obtained from subdividing a quarter-section 
of land depends not merely upon the depth of the lot, but also upon the number of 
corners and the amount of the corner premium for various uses. Here again it is a 
question as to what extent it pays to sacrifice net lot area to secure more corners, 
and that depends on the amount of the corner premium. 

The importance of corners increases with the degree of intensive utilization of 
the land. For private residences, corners with their frontage on two streets with 
their added noise and invasion of privacy, have little if any advantage as compared 
with an inside lot. For an apartment building, however, a corner has a great ad- 
vantage, for almost the entire lot may be utilized when the streets provide wide 
light and air shafts. A corner provides the same advantage for tall office buildings, 
for to obtain the same light and air for an inside lot that frontage on a street 
affords would require the purchase of a 60- or 8o-foot strip next to it, and the keep- 
ing of that lot vacant. Also a corner where two streams of traffic flow has far 
greater value for business purposes than an inside lot. 

The increasing importance of Loop corners as compared with inside lots during 
the history of Chicago is shown by Table LXXIV, in which sales prices of 8o-by- 
iSo-foot corners in the Chicago Loop are compared with sales prices of adjoining 
8o-by-i8o-foot inside lots. 3 

Similarly, prior to 1900 there were few outlying business corners that had a 
special value much higher than inside lots or other corners on the same street. In 
1926 not only were ordinary business corners considered to be worth 25 per cent 
more than adjoining inside lots, but there were also several hundred double sec- 
tion or transfer corners where neighborhood land values reached value peaks that 
were determined by special rules. Land values dropped downward from these 
corners. Thus in the 1931 assessment the average front-foot value of eighty-six 
such corners was over double the value of the average inside lots on the best street 
within 300 feet, triple the value of the average inside lots on the best street from 
300 to 600 feet away, and quadruple the value of the best inside lots 600 feet away. 

The extent to which it pays to provide extra corners in a subdivision depends 

3 These premiums include much more than the ordinary corner premium, for an 80- 
by-i8o-foot corner whose long side is on State Street, for instance, includes frontage on 
State Street in addition to the ordinary corner. In view of the lack of data on small 
corners, this is the only method that can be applied throughout. 



APPENDIXES 



433 



upon the amount of the corner premium. Thus in Plan C, suppose that the number 
of corners be doubled by increasing the number of cross-streets, as Plan E in Figure 
103 shows. The amount of corner and inside frontage and the aggregate value of 
the tract, depending on different corner premiums, are shown by Table LXXV. 
Thus, if corners are worth over 50 per cent more than inside lots, or at least as much 

TABLE LXXIV 

ESTIMATED CORNER PREMIUMS OF LOTS IN 

THE CENTRAL BUSINESS DISTRICT 

OF CHICAGO 



Year 



1836 

1856 

1873 

1896 

1926-32. . 



Average 
Corner 
Premium 
(Per Cent) 
20 
25 
25 
60 
100-300* 



* Using the corner influence and depth tables of Cook 
County Assessors for 1928 and 1932, the premium is 100 per 
cent where both intersecting streets are of equal value and 
proportionately higher where the most valuable frontage 
is on the long side of the lot. 

as 75 per cent more, then it pays to use Subdivision Plan E. For ordinary residen- 
tial, apartment, or commercial use, where the corner premium is less than 50 per 
cent, such a subdivision plan would not be the most profitable, but for the Loop or 

TABLE LXXV 

EFFECT OF DOUBLING THE NUMBER OF CORNERS UPON 
AGGREGATE LAND VALUES 



SUBDI- 


INSIDE 


CORNER 
FRONT- 


CORNER PREMIUMS 


AGGREGATE VALUE 


VISION 
PLAN 


FRONT- 
AGE 


AGE 

(SOFT. 

COR.) 






I 


II 


III 


IV 


V 


I 


II 


III 


IV 


V 


C.. 
E 


8,000 
5,440 


1, 600 
3,200 


O. I 
O.I 


0.25 
0.25 


0.50 
0.50 


0.75 
0-75 


1.0 
I.O 


$9,760 
8,960 


$10,000 
9,440 


$10,400 
10,240 


$10,800 
I I , 040 


$II,2OO 

I I , 840 



central business area, numerous cross-streets and numerous corners add to the 
aggregate land value. Hence the original mode of Loop subdivision turned out to 
be most advantageous in the long run. 

2. Differences in the owner's title. Title to real estate, unlike that to stocks, 
bonds, and negotiable securities, varies with the status of the owners with respect to 
judgments, marital status, interests of adverse holders, and contractual capacity. 
A deed conveys only the title that the grantor has, and this is subject not only to 



434 ONE HUNDRED YEARS OF LAND VALUES 

any defects in the title of the immediate owner, but to all the defects in his prede- 
cessors' titles that have not been cured by adverse possession or suits to quiet title. 
Hence title to real estate is ordinarily not conveyed without an examination as to 
the state of the title, and the submission of a report to the prospective buyer which 
is called an "abstract" and which is a digest of all prior conveyances and all judg- 
ments or matters of record affecting the title. This abstract is submitted to the 
buyer's lawyer, and if in his opinion it discloses nothing that will seriously impair the 
seller's title, the deal is ready for consummation. Frequently, however, a minute 
examination will reveal some faint flaw in the title, which some lawyers will pass 
over and other punctilious lawyers will not, so that when abstracts are used ex- 
clusively the buyer who wants to withdraw from a deal may cause his lawyer to 
search for such faint flaws. Defective titles are seldom sold, so that the seller 
usually takes steps to remove all judgments against him or clouds against his title 
until it is made merchantable. Sometimes, however, men who are willing to take 
long speculative chances pay for deeds from land claimants whose titles are open to 

TABLE LXXVI 

NUMBER OF GUARANTY ORDERS TAKEN BY THE CHICAGO TITLE 
AND TRUST COMPANY, 1911-33 



1911 

IQI2 . . 


. 16 
ig 


,6 9 6 
,869 


1917. 
1918. 





2 3 

18 


,936 
, 373 


1923. 
1924. 


. 8o[ 


919 

948 


1929.. 

1930. . 


83,557 

61 ,912 




23 


589 


1010 




31 


) O / O 

477 


* V *T 

IQ2EJ 


98 


yr** 

018 


yo v 
IQ3I 


47 208 


IQI4 


23 


y y 

,966 


y y 




o * 


j *r/ / 
878 


V ' 

1026 


V J 
IO3 


406 


vo 
IQ32 


. . *$./ , ^ytj 

37 , ^36 


1916. . . . 


. 26 
. 28 


j vy \j \s 

,426 
,235 


1921 . 
1922. 




40 

53 


J / 

iso7 


xy^vy . 
1927. 
1928. 


w o > 

. 107, 
104, 


*rV w 

432 

283 


^ * 
1933*. 


O / 1 OO 

32,695 



* First ten months. 

serious doubt or are the subject of litigation. Captain Streeter thus gave deeds to 
land in Streeterville on the strength of various claims preferred by him which were 
later held by the courts to be without validity. 

a) Guaranty policies of the Chicago Title and Trust Company. In Chicago and 
the adjacent territory, transfer of real estate on examination of abstracts alone has 
been supplanted to a considerable extent since 1900 by use of Chicago Title and 
Trust guaranty policies as evidences of title. In the great fire of October 9, 1871, 
all the records of deeds in the County Building upon which the evidence of title 
depended were destroyed. The private abstract companies managed to save copies 
of these records, so that they alone had the knowledge of the state of the early titles. 
Beginning in 1887 with the organization of the Title Guaranty and Trust Company 
and continuing in 1891 with the formation of the Cook County Abstract Company 
the practice was started of not merely showing an abstract and giving an opinion as 
to the state of the title, but of guaranteeing for a consideration the validity of the 
title. In 1901 all of the abstract and guaranty companies were consolidated in the 
Chicago Title and Trust Company, which acquired all the original records of the 
abstract companies, such as Chase Brothers (1847-73), Shortall and Hoard (1852- 
73), Handy and Company (1873-1901), and which thus having the only original 
ante-fire title records, proceeded to issue title guaranty policies in increasing num- 
bers, as Table LXXVI shows. 



APPENDIXES 



435 



The declining importance of abstracts is indicated by Table LXXVII, showing 
orders taken by the Chicago Title and Trust Company for abstracts as well as for 
guaranty policies. 

In securing a title guaranty policy, the company first renders a preliminary report 
showing all objections to the title. The owner then takes steps by affidavits and 
other means to remove these objections if it is possible. If the objections are slight, 
the company may waive them and guarantee against them, whereupon the subse- 

TABLE LXXVII 

GUARANTY ORDERS OF THE CHICAGO TITLE AND TRUST COMPANY 
COMPARED WITH ABSTRACT ORDERS 



Year 


Guaranty Orders 


Abstract Orders 


Per Cent Guar- 
anty Orders to 
Abstract Orders 


ion . . 


16,606 


36,080 


4.3 3 


IQI2 


IO 860 


4.1 34.O 


4.8 3 


IQI3 


23 ?8o 


4.6 Q4.7 


en 2 


IQI4. 


23 066 


4.1 8o7 


?7 O 


IQI? 


26,426 


3O 832 


6l 3 


1016 


28,231; 


30 ?64. 


71 2 


IOI7. . 


2^,0^6 


30,4.33 


70 7 


IQl8.. , 


IQ, 777 


24,82? 


74. O 


IQIQ 


21 4.77 


A A -21Q 


71 O 


IQ2O 


34. 8?8 


e-i 687 


6? O 


IO2I 


AO 2AO 


ci 6?6 


77 8 


IQ22 


c8 617 


?3 ?O7 


IOQ 6 


IQ23 


71 ,OIQ 


68,080 


IO? 7 


IQ24.. . 


80 , 048 


?6,466 


14.3 ? 


102? 


08 OI7 


C2 3OO 


183 o 


1026 


101 4.06 


AC 83O 


226 o 


1027 


IO7 4.12 


38 807 


276 2 


1028 


IOA 283 


32 737 


3IO O 


IQ2Q 


83,??7 


27 32? 


306 o 


iQ^o. . . 


6l % QI2 


2O , ?OQ 


3O2 O 


IQ3I . . 


47,208 


1C, 707 


300 o 


1032. . 


37, 536 


I I , ?44 


32?. 2 


* 

IQ33 . 


32 60 % 


77?? 


4.21 6 











* First ten months. 



quent owners are relieved of further anxiety on that score. If the objections are of 
a more serious nature but are still capable of being classified as insurable risks, or 
if it is a case of an impediment to transferring the title that can be covered by a bond, 
the company will still issue its policy. Title guaranty policies have been favored 
also because they are issued in the amount of the purchase price of the property, 
whatever may be its amount, and they are also issued to guarantee the validity of 
large mortgages and bond issues, thus assuring purchasers of the bonds that they 
will suffer no loss from defects in the title. One of the important protection features 
of these policies is their insurance against the possibility of a forged deed hi the 
chain of conveyance, which would transfer no title of any kind; another is that 
the company undertakes the burden of defending a title which is assailed. 



436 ONE HUNDRED YEARS OF LAND VALUES 

b} The Ton ens system. In 1900 the Torrens system was adopted in Cook 
County. By this method the property goes through a judicial process, to remove 
all clouds or possible defects. The growth of the Torrens system since 1900 has 
been steady, but it still enjoys only a small minority of the total title business. 

c} Differences in mortgages and leasehold interests. In boom periods, when many 
lots have been recently sold on partial payments, with a mortgage or trust deed 
given back for the balance of the purchase price, lots are resold subject to mortgages 
maturing within from one to three years or longer. As these obligations come due, 
the prospective buyer at such a time must deal with both the owner of the fee title 
and the holder of the mortgage, for unless the mortgage can be extended, the buyer 
must pay the equivalent of all cash for the property. Later, when these mortgages 
have been paid off or foreclosed upon, the property can be sold on any terms the 
holder of the clear property and the buyer may agree upon, regardless of any 
mortgage interests. It is a disadvantage for any property to be incumbered by a 
mortgage that soon falls due, and hence prospective buyers are careful to inquire 
into maturity dates of mortgages on the property. Heavy prepayments required to 
be made by the terms of the mortgage are also regarded as objectionable from the 
buyer's standpoint, as they lessen the income he can enjoy from the property in 
the immediate future. 

The growth of the practice of ninety-nine-year leases after 1890 divided the 
ownership interests in most of the Loop real estate in two. The owner of the fee 
received a fixed ground rent, and the value of his interest was determined by 
capitalizing the ground rent, which varied only with the interest rate. The holder 
of the leasehold interest, on the other hand, was in position to reap a larger profit 
if the market rentals increased over that he agreed to pay under the terms of his 
lease. On the other hand, many leases made at the peak of booms were later for- 
feited for non-payment of the ground rent. 

d) Differences in financial necessities of the owner. The price for which an 
owner will sell his lot frequently depends on the past history of the prices of the lot. 
If the owner bought during a boom, he will often hold tenaciously for a price that 
will enable him to recover the principal invested. A large number of lots in the 
blighted area have been so held for years in the hope that some big industry will 
eventually need the lot and enable the owner to recoup his loss. If, however, the 
original purchaser dies, and it comes into the hands of heirs who regard it as a 
windfall, the same lot may be sold for whatever it will bring. Again, if an owner 
is suddenly pressed for money, he may sell a lot below the market value in order 
to raise cash to meet the emergency. Sometimes the necessity of expanding a grow- 
ing business forces the owner of the business to pay an excessive price for an 
ad j oining^parcel. 

e) Differences in ownership units. It frequently happens that the value per 
square foot of a large tract is greater than the value per square foot of a smaller 
parcel in the same tract. For instance, it is not economical to build a tower office 
building on a small lot because the space taken up by walls, elevators, and halls 
forms so large a percentage of the total building area that the percentage of the 
rentable area to the total area is abnormally small. The Mather Tower, on the 



APPENDIXES 437 

Wacker Drive, is an example of such a tower building on a small lot. If, however, 
it is proposed to erect a huge building covering a block or several blocks, like the 
Merchandise Mart, it is difficult, if not impossible, to acquire sufficient ground in 
the heart of the Loop, for most of the blocks are partly improved already with tall 
buildings, and the blocks occupied by old structures are frequently hi the hands of 
a number of owners, some of whom are not willing to sell at a reasonable price. 
The builders of the Merchandise Mart were forced to acquire the air rights over 
the railroad tracks on the north bank of the Chicago River in order to acquire a site 
large enough for their purpose. Thus a single large holding under one ownership 
has a greater value for purposes requiring a tract of such size than the same holding 
in the hands of a number of owners, because all of the difficulties of assembling the 
property have been met. 

Again in the rebuilding of the so-called blighted areas one of the greatest prob- 
lems is to acquire a single solid block of land. The blocks are nearly all split up into 
many ownership units, and if an attempt were made to buy all the parcels in the 
block, before all the lots were acquired the owners of the remaining lots, feeling 
that something big was in the wind, would raise their prices to prohibitive figures 
and defeat the project. Therefore, a solid block under one ownership would have 
a greater value per square foot than the individual lots in the block for one who 
needed the entire block for his projected housing development. 

There are other interesting examples of how the mere fact of division of owner- 
ship lessens the aggregate land value. Thus at the northwest corner of Michigan 
and Austin the corner holding fronting along Michigan is only 25 feet deep, and the 
building erected on it is too small for the most economical operation. Yet this 
building shuts off entirely from Michigan Avenue the rest of the block, and thereby 
deprives it of most of its value. It is estimated that under a divided ownership the 
two holdings have an average value of $16.67 a square foot, but that if united in 
one ownership, so that the west part of the block had an outlet on Michigan Avenue, 
the average value of the entire holding would be $30 a square foot. Again the air 
rights over an alley entering Wacker Drive would be almost as valuable as the fee, 
if the lot on each side of the alley was owned by the same person, because a large 
building could be constructed economically over the alley. Divided in two, the air 
rights are far less valuable; because, since no pillars or foundations can be placed 
in the alley and since the space over the alley could not be spanned, expensive 
cantilever construction would have to be employed to secure the advantages of the 
air rights and this added expense would greatly lessen their value. 

Thus in many cases a loss of utility results from the dividing of land into small 
ownership units. The efficient and economical development of an entire block or 
tract is frequently not possible until all the individual lots are acquired by a single 
owner, and to merge these scattered holdings is sometimes a matter which requires 
great finesse and long negotiations. 

/) Differences in the effectiveness of propaganda. The owner of a tract of land 
may by his own efforts create a value for it that it would not otherwise have. He 
may take a tract of raw acres, subdivide it, give it a beautiful name, and induce a 
number of his friends and clients to settle there. Although there are a number of 



438 ONE HUNDRED YEARS OF LAND VALUES 

other tracts equally suitable and desirable, if not more so, than this one, the mere 
fact that he has induced a restless swarm of people to settle there like a hive of bees 
has given it value. A large number of people are led to select their homesite by the 
persuasive talk of a real estate salesman; but, once having selected it, they become 
attached to it, and persuade in turn some of their friends to follow them. Houses 
are built, street improvements are installed, and railroad stations are built at 
certain locations rather than at other places only because of the energetic actions 
of some promoters or landowners. Similarly, the action of some local banker or real 
estate man may "make" some new business at one point because a new theater, a 
new bank, a drug store, and a block of new stores is financed and built at that spot. 4 

3. Differences in land values due to actions of the community or the state. There 
is another group of forces that are not under the control of the individual landowner 
or the succession of owners of a tract of land, except in so far as they can control or 
modify public opinion or persuade the legislature to pass new laws. This group in- 
cludes ordinances of the City Council affecting land values, local union rules, and 
laws of the state of Illinois. First are the conditions affecting the tax rate levied on 
different tracts of land, second are the laws relating to foreclosure and the sale of 
land for non-payment of taxes, third are local zoning laws, fourth are local building 
codes, and fifth are local union wage scales. 

a) Differences in tax rates and exemptions. There is a slight difference in the 
tax rates in the different townships constituting Chicago as a result of the differ- 
ences in expenditures of local taxing units. A very marked difference in the tax rate 
exists between land just inside and that just outside the city limits, and in sections 
where the land within the city limits is undeveloped and possesses no advantages 
over that outside the city limits, as on the Southwest Side, the difference in the tax 
rates causes the land just inside the city limits to be worth less than that just out- 
side. Frontage on Howard Street on the Evanston side is worth less than land 
across the street on the Chicago side, on account of higher telephone, water, 
electric-light, and gas rates. 

A greater basis of differentiation in taxation has been the extra-legal under- 
assessment of certain townships and districts as compared with others. In 1927 
Calumet was assessed at 13.1 per cent of its sales average as compared with a 
general average of 35.9 per cent for the entire city.s When this discrimination pre- 
vails for years, it is reflected in higher land values in the favored districts. Even in 
the 1931 assessment Calumet has been assessed at 76 per cent of sample spot ap- 
praisals as compared with an average of 95 per cent for the city and 105 per cent for 
the West Side, although the unusual discrimination that existed before has been 
greatly lessened. 6 Similarly, certain favored interests in the past have been assessed 
at as little as i-io per cent of the sales value of their property, while others were 
assessed as high as 90 and 100 per cent. 

4 Blake Snyder and Ralph West Roby, Fundamentals of Real Estate (New York: Harper 
& Bros., 1927), pp. 121-24. 

s Herbert D. Simpson, Tax Racket and Tax Reform in Chicago (1930), p. 170. 
6 Writer's own computation. 



APPENDIXES 439 

Property actually used for religious, educational, or burial purposes is exempt 
from taxation by law, and all the real estate of Northwestern University, whether 
used for educational purposes or not, is by special charter under which the Uni- 
versity was incorporated, exempt from taxation, provided the amount held does 
not exceed two thousand acres. 

b) Differences in foreclosure and other laws relating to land titles. Chicago lots 
differ from those in other states, but not as between themselves in state foreclosure, 
tax laws, and in other laws affecting land titles. In some states, e.g., Missouri, a 
short and summary method of foreclosure enables a mortgage holder to obtain title 
in case of default within sixty days without great expense, but in Illinois the owner 
of the equity has a period of a year and his creditors three months more to redeem 
after his real estate has been sold to satisfy the mortgage. The owner of the mort- 
gage or trust deed can only acquire the title by filing a bill to foreclose through his 
attorney, by filing his evidence before a master in chancery, and thereby incurring 
expenses, including attorney's fee, master's fee, and court costs, which usually 
amount to 10 or 15 per cent of the value of the property. Hence it usually pays a 
mortgage holder to give the title holder a substantial sum for a quit-claim deed, 
even if the property is worth less than the amount of the mortgage. Although this 
lengthy and cumbersome method of foreclosure is held to be beneficial in protecting 
the title holder from losing his property, it causes loss to everyone except attorneys 
in periods of depression and is said to hinder capitalists from investing in Chicago 
mortgages. 

The tax laws of Illinois also differ from those of other states, in that a tax deed 
which is granted after two years' non-payment of taxes to private buyers of tax 
liens does not convey a title to the tax-buyer which cannot be defeated, but only a 
claim which can be removed as a cloud on the title at any time thereafter on pay- 
ment of the amount of the taxes and penalties. This fact partly accounts for the 
large percentage of tax delinquencies in periods of depression, for owners are not 
faced with a loss of their property but only an accumulation of penalties. It is true 
that the Illinois statutes provide for a foreclosure of land for non-payment of taxes, 
but this law has seldom, if ever, been enforced. 7 

Another feature of Illinois law before July, 1933, was the prohibition or refusal 
to allow corporations to be formed for the purpose of dealing in real estate. Hence 
until 1933 a means of obtaining standard units that could be bought and sold in a 
market through the issuance of stock in corporations owning tracts of land was 
rendered unavailable. The Calumet and Chicago Canal and Dock, however, did 
own large tracts of land in the Calumet region and the sale of its stock did reflect 
rising land values. 

Differences in state and local laws affecting title to real estate is another ob- 
stacle in the way of the organization of a national real estate market. 

c) Differences in building codes and fire limits. Each city has its own building 
code, and to the extent that the requirements of these codes exceed the needs of 

i The Skarda bill, which became a law in 1933, provides for the appointment of receivers 
to collect income for past due taxes, but this does not cause a forfeiture of title. 



440 ONE HUNDRED YEARS OF LAND VALUES 

safety, they add to building costs and detract from land values. It is charged that 
the present Chicago code stipulates the materials to be used under certain condi- 
tions and refuses to allow the substitution of cheaper materials of equal strength, 
thereby adding to building costs and lessening land values. 

The establishment of fire limits after the fire of 1871, within which frame struc- 
tures could not be erected, temporarily lessened the value of some of the land within 
the fire limits in 1872, as the best use of some urban land at that time was for cheap 
frame dwellings. The extension of the fire limits since that time to cover almost the 
entire city has now been looked on as an advantage, preventing, as it does, the 
erection of cheap frame houses that would lower property values. 

Finally, the local zoning ordinance passed hi 1923 limits the height, the volume 
of use, and the kind of use, whether residential, business, or industrial. This zoning 
law does not impose a very serious limit on the use of land, for if all the land in 
Chicago were built to the limit allowed by the zoning law, the entire population of 
the United States could be housed hi the city. The 5,000,000 feet zoned for business 
is enough for the needs of a population of 10,000,000 people, or three times the 
present population. Moreover, whenever there is any possibility of a higher use for 
any block or parcel of land than the one for which it is zoned, it is not very difficult 
to have it zoned for the higher use, as the five thousand amendments to the zoning 
law testify. Private restrictive agreements that have already been considered are 
far more effective barriers to land utilization than the zoning law. 

The foregoing categories have listed causes of differentiation between Chicago 
lots, but the actual combinations of these factors that occur hi the case of individual 
lots are so diverse that no lot of land can be properly appraised without a personal 
inspection of its location and that of the surrounding neighborhood, a study of the 
character of the people living near it, a knowledge of the history of the community, 
and an acquaintance with all the facts pertaining to rents, taxes, and operating 
costs. With all this information as to value, the title to no lot can be safely pur- 
chased without an examination of the records of ownership and a search of judg- 
ment records, tax and special assessment rolls, marriage and divorce records, the 
copies of deeds, mortgages, and contracts affecting the title; a survey of the lot to 
determine its exact location; and an inspection to make certain there are no 
squatters on the land who are claiming title by adverse possession. 

With all the possibilities of variation which makes each lot a distinct entity, 
there are, nevertheless, certain factors that link them together in a market, even 
though it be an imperfect one. The majority of Chicago lots have the common 
depth of 125 feet, and for those that differ from this standard there are depth tables 
for computing their values in terms of the common unit. Similarly, the value of 
corners is expressed hi terms of ratios to the value of inside lots. Again, wide areas 
of residential land of substantially the same character have about the same value. 
When values differ widely, it is usually on the basis of some gradient, by which the 
values slope up toward a transfer corner, or toward a fast transportation line, or 
toward the lake, or a park, or by which values slope downward toward an objec- 
tionable section, such as a colored district, the Stock Yards, the drainage canal, or 
the railroad yards. Moreover, differences in ownership records have been stand- 



APPENDIXES 441 

ardized by the Chicago Title and Trust Company, which by their guaranty make 
all titles equally merchantable and of the same grade as to title. Finally, money 
rents and capitalization rates reduce diverse factors to a common pecuniary basis, 
showing the composite result of all the multiple permutations and combinations. 

B. THE MECHANISM OF THE CHICAGO LAND MARKET 

Such being the nature of the units bought and sold in the Chicago land market, 
it now remains to discuss the mechanism of that market. This subject will be con- 
sidered in the following order: (i) the character of the buyers and sellers, (2) the 
method of bringing buyers and sellers together, (3) the making of the contract, (4) 
terms of sale and financing purchases, (5) sources of price information, (6) relations 
between the parties after the deal is closed, and (7) seasonal elements in the Chicago 
market. 

i. Buyers and sellers. Since every real estate transaction is a matter of public 
record, the identity of the present or past title holders of any tract of land can be 
determined by examination. Persons who are subject to judgments, or who do not 
want other real estate operators to know what they are doing, frequently take title 
through "dummies" who pose as the ostensible owners, or through a trust company 
which holds title under a trust agreement. 

Buyers may be classified according to their degree of knowledge of land values, 
according to their residence and occupation, according to the purpose for which 
they are buying, and according to their race. 

a) Degree of knowledge of land values. The "lambs" hi the real estate market 
are those who during the height of a boom buy from subdividers at prices that are 
usually from three to ten times the current market price for acre tracts. The pro- 
fessional operators are the brokers who have acquainted themselves with the asking 
prices of all the land in their vicinity or the speculators who have had considerable 
experience in buying and selling. The "insiders" are traction magnates or officials 
of transportation lines who buy land in advance of a proposed extension, as in the 
case of the building of new street-car lines by Yerkes before 1900 and the construc- 
tion of the rapid transit lines to Niles Center and Westchester in 1925 and 1927. 
Within the same category also fall those who have special knowledge in advance 
that a motion-picture palace or a branch of a big department store is about to be 
erected in a certain locality. Of a similar nature is the case of politicians who buy 
tracts or lots and resell them to the city or county for use as parks, school sites, 
or fire stations. 

6) Purpose of buying land. In addition to purchase by the city for public uses, 
the demand for land comes from at least four types of buyers. The first is the 
home-buyer, who either buys land with a house, bungalow, two-apartment building 

8 Alonzo H. Hill, who became a director in the Yerkes traction companies for the pur- 
pose of learning when and where new lines would be built, according to a statement made 
by him to the writer in September, 1933, received advance information that the Ravens- 
wood elevated line would be constructed to Kimball Avenue. He thereupon bought the 
41 -by-i 25-foot northwest corner of Lawrence and Kimball for $3,300 and later sold it 
for $52,000. 



442 ONE HUNDRED YEARS OF LAND VALUES 

already on it, or else buys a lot for the purpose of building a home. This demand is 
perhaps the most stable of all and continues even during periods of depression. The 
second source of demand for land comes from builders and contractors who erect 
houses and apartments for the purpose of resale, and finance their operations on 
borrowed money as much as possible. This demand is very strong during booms, 
but almost ceases in a depression. The third class of land-buyers are the specu- 
lators, who purchase for the sole purpose of reselling the land without further im- 
provements to home-buyers, contractors, the general public, or other speculators. 
Demand from this group rises high during the boom and stops altogether in the 
depression. A fourth type of demand comes from institutions like the Marshall Field 
estate which are required by the terms of a trust or will to invest in Chicago real 
estate. The foregoing list is not exhaustive, but it will serve to suggest the variety 
in the sources of the demand for land. 

c) Residence or occupation of the buyer. In the boom of 1836 Chicago lots were 
sold at auction-rooms of New York City, and in 1889 and 1890 the publicity at- 
tending the World's Fair attracted buyers from many other cities. In the last 
boom, however, buyers have usually restricted their purchases to the locality hi 
which they live. In the boom of 1926 North Side residents bought lots chiefly on 
the North Side and South Side residents chiefly on the South Side. Moreover, 
buyers tend to confine themselves to the type of land with which they have been 
familiarized by their occupation. Storekeepers buy business lots; apartment- 
owners, builders, tenants, or janitors invest in apartment lots; and manufacturers 
in industrial land. 

d) Race or nationality. The racial factor is also important in the Chicago land 
market. The Greeks were noted for their desire to acquire double-section corners 
as sites for candy stores, and they formed syndicates among themselves to make 
such purchases. The Jews exercised a marked influence in stimulating the specula- 
tive boom on certain business streets such as Lawrence Avenue. The foreign-born 
in general were more eager than native Americans to attain the prestige of land- 
ownership, which was frequently impossible for them in Europe. Prior to the 
shutting-off of the main current of immigration, there was a steady business in the 
older sections of the city in selling the poorer grade of houses to the newest immi- 
grants, and of immediately making another sale to the seller of a house in a newer 
neighborhood. 

Sellers as well as buyers differ in their degrees of knowledge. On the one hand are 
"sleepers" who live out of the city, and are unaware of a sudden boom that has 
made their dormant landholdings valuable. Some real estate operators work like 
detectives to discover the whereabouts of such persons and to secure an option on 
their land before they learn the facts. At the other extreme are the subdividers who 
sell with full cognizance of the inflated values of their properties, but who engineer 
an organized system of propaganda to sell their lots to persons ignorant of land 
values. 

Sellers also differ as to their plan of selling their land. Some speculators have 
made a mistake in holding a large tract in the line of development out of use by 
seeking very high prices for it, which may cause the development to go around them 



APPENDIXES 443 

or in another direction. Thus the attempt by the Pullman Land Company to create 
a business center in the old part of Pullman caused merchants to acquire cheap 
land on Michigan Avenue and to start the main business center there. So also the 
attempt of West Randolph Street landowners to secure high prices from the South 
Water Street merchants caused them to jump to a new location entirely. Again, 
when the owners on South Clark Street raised the rents to Chinese merchants, they 
migrated in a body to Twenty-second and Wentworth Avenue. Some sellers in 
disposing of a tract of land, therefore, adhere to a policy of selling part for whatever 
it will bring and reserving only part of it to hold for the rise in values made possible 
by the developing community. Sometimes, however, tracts held out of use until 
ripe for their highest and best use have attained higher values than tracts sold 
piecemeal, for they are not marred by any cheap buildings or residences of varying 
age and styles of architecture. 

2. Methods of bringing buyers and sellers together. A prospective buyer may get 
in contact with landowners by (i) reading advertisements of land listed for sale in 
the newspapers, (2) through a telephone or personal call or advertisement of a sub- 
division company maintaining a sales force, (3) through a neighborhood broker who 
has listings of lots in his neighborhood offered for sale, (4) through "For Sale" 
signs on the lot, (5) by acquiring from the county deed and tax records the names 
and addresses of all the owners of land in a given neighborhood and by writing to 
all of such owners and thereby ascertaining which lot is for sale at the lowest price. 
The last method is that frequently employed by the brokers themselves, who, in 
addition to maintaining an office to receive listings, often send out hundreds of 
letters to obtain listings, with the hope of obtaining one or two bargains they can 
buy and resell at a substantial profit. 

The means of spreading information as to land values has changed with the 
growth of Chicago. In the boom of 1836, when the town was huddled along the 
banks of the Chicago River, riders on horseback shouted the news of land sales 
through the streets, and crowds thronged auction-rooms to keep in touch with 
prices in the land market. Buyers were taken to suburban tracts in omnibuses as 
early as 1853, and in the boom of 1890 excursion trains carried large crowds to new 
subdivisions. With the increasing size of the city, other methods were devised by 
subdividers to get in touch with prospective customers. Canvassers or agents as 
well as handbills and newspaper advertising were employed in 1890. In the boom 
of 1925 and 1926 the widespread distribution of telephones caused some firms to 
employ men to call up nearly everyone whose name was in the telephone directory 
for the purpose of making appointments with salesmen.' The auction method of 
selling fell into disuse in Chicago after 1873 partly because the fact that owners 
were allowed to withdraw their offerings if the bids were not satisfactory discour- 
aged buyers and partly because buyers did not come in sufficient numbers to insure 
a market satisfactory to the sellers. Market information was obtained thereafter 
mainly through brokers' offices. There was a marked sectional separation in the 
market as between the North, South, and West sides, those living in the respective 
sections usually buying lots only in their own part of the city. Markets were split 

According to investigations made by the writer. 



444 ONE HUNDRED YEARS OF LAND VALUES 

into neighborhoods or tracts, with the buyer's knowledge of land values frequently 
confined to that of the scale of values shown on the subdivider's plats. This was 
frequently true of the customers of the subdividers who after being taken to the 
sales office on the property had little opportunity to see or learn the sales prices of 
other properties. In the first two decades of the twentieth century, however, most 
of the lots developed and sold were reasonably valued, enabling buyers to resell 
at substantial profits with the subsequent rise in land values. The widespread suc- 
cess that had accrued to average lot-buyers from 1900 to 1920 was taken advantage 
of in the boom of 1925 and 1926 by less scrupulous subdividers who sold large 
tracts of outlying land at prices higher than those justified by its possibilities or 
utilization. 

3. Signing the contract. Because of the Statute of Frauds, originally enacted 
in England and subsequently adopted hi every American state, no agreement for 
the sale of land is valid, unless there is a memorandum signed by the party selling 
the land agreeing to the terms of sale. Hence the quick dispatch of the stock market 
in which sales of millions of dollars are made by a broker nodding or holding up a 
finger is impossible. The requirement of writing imposes delay, for the contract 
must state the location or technical legal description of the property, the considera- 
tion and the terms of sale, and a party who has orally agreed to a sale may change 
his mind before the formal contract can be drawn up and signed. If the contract 
is once signed and recorded in the recorder's office, no other conveyance of the land 
can be made until the contract is disposed of, and if the contract is legal and bind- 
ing, the owner will be forced to convey the property by a Chancery Court on a bill 
for specific performance. Even in such a case, however, the title is not immediately 
transferred and there may be a delay of a year or more before the court proceedings 
are instituted and brought to a conclusion. 

4. Terms of sale and methods of financing purchases. The general practice of 
buying Chicago real estate on partial payments dates back to 1836 when the Canal 
Commissioners offered lots for sale at one-fourth down and the balance in one, two, 
and three years, with interest at 6 per cent. These famous "canal terms" were 
adopted in private transactions for many decades thereafter. Subdividers in selling 
lots set their terms at from one-fifth to one-third down, with the balance payable 
in monthly instalments for three to four years, and on such a basis of sale they do 
not give a deed until all the payments are completed. In cases where a deed is 
given to the property, usually one-half of the purchase price is paid at the tune of 
the conveyance and the payment of the balance is secured by a mortgage on the 
property itself. In still other cases where a broker or prospective buyer secures an 
option or an exclusive sales contract for a period of from sixty to ninety days, very 
little, if any, cash is paid down, and the holder of the option has an opportunity to 
reap a large speculative profit on a small cash investment. Thus in the case of the 
majority of real estate transactions, credit is extended by the seller to the buyer. 
This is one of the important factors tending to inflation of real estate prices during 
booms, for the proportion of cash required for purchases usually declines as values 
rise. In periods of depression, sales are made at low prices for all cash or for heavy 
cash payments, but as the speculative rise gets under way, sellers are induced by 
the prospect of selling at large profits to accept smaller cash down-payments. 



APPENDIXES 445 

The banks further aid in the process of inflation during booms, as they also 
accelerate the liquidation in* the depression. The boom of 1836 was financed on a 
flood of "wild-cat" money, and Chicago real estate was skyrocketed by the note 
issues of the State Bank of Illinois and the issues of Michigan banks that were issued 
against wild land. The collapse of these banks with the forced liquidation of their 
holdings intensified the gloom of the depression in 1841 and 1843. The rise of the 
new state banks of issue in Illinois in 1852 accelerated the rise to the new peaks of 
1857, and their debacle on the outbreak of the Civil War enhanced the gloom in 
real estate circles in 1861 and 1862. The advent of the new national banks in 1863, 
and the loans of eastern life insurance companies on Chicago real estate were fac- 
tors in the rise in land values finally culminating in 1873. The suspension of some 
of the banks and the closing of the savings banks in Chicago featured the intense 
depression of 1877. The national banks again aided the rise in land values up to 
1890, and their refusal to make further loans for real estate on so extensive a scale 
put a damper on real estate activity in the fall of 1890. The sensational rise of the 
deposits of outlying state and national banks from $30,000,000 in 1890 to $800,000,- 
ooo in 1928 was accompanied by an equally sensational rise in the value of outlying 
Chicago real estate. These banks contributed to the rise in land values in many 
and devious ways. The rise in the number of outlying state and national banks from 
8 in 1890 to 203 in 1928 created a considerable demand for sites for banking quar- 
ters. Of far more importance than this was the fact that these banks invested most 
of their funds in local real estate in one form or another. They gathered the savings 
of their communities, which amounted in 1928 to more than the savings deposits of 
the Loop banks, and put them at the disposal of contractors, builders, storekeepers, 
etc., for the purpose of building stores, apartments, or theaters. Many of the bank 
presidents were also real estate operators, and in some cases real estate loans were 
the largest items on their balance sheet. But the percentage of real estate loans to 
total loans by no means shows the total extent of these real estate operations, large 
as this item was. Loans were made on personal notes or on financial statements to 
men whose assets consisted chiefly of real estate. Loans were also made on the 
security of real estate mortgages as collateral. Neither of these types of loans ap- 
peared as "real estate loans" although they were such in essence. Furthermore, the 
banks sold large issues of real estate bonds on local real estate. 

The sale of real estate bonds in huge volume was one of the features of the post- 
war bond market. The war had popularized the sale of bonds to the public through 
the drives to sell Liberty Bonds. Finding that the public could be induced to buy 
real estate bonds in large quantity, corps of salesmen were trained to canvass the 
field. The public response was so great that opportunities for selling bonds were 
created. Contractors were encouraged to plan large buildings, stores, office build- 
ings, kitchenette apartments, and loans were offered sufficient to pay for 100 per 
cent of their cost or more. These loans were justified on appraisals that capitalized 
the boom rents. 

The ease of obtaining credit for buying land or for building purposes from the 
banks and the mortgage houses stimulated the real estate boom prior to 1928, as 
did also the sale of lots on small down-payments. The movement could not have 
gone so far had a large amount of cash been required of the speculators. But the 



446 ONE HUNDRED YEARS OF LAND VALUES 

possibility of shoestring financing encouraged them to extend their operations to 
the limit. Erecting buildings entirely on borrowed money in many cases, con- 
tractors borrowed an additional amount on second mortgages and proceeded to 
continue the process. 

Thus the point was reached in 1928 where 100 per cent loans were made on first 
mortgages in many cases, and where an additional 20 per cent was obtained 
on a second mortgage. These junior issues had hitherto enabled an owner to raise 
80 per cent of the conservative value of his property on the basis of mortgages. A 
first mortgage of from 50 to 60 per cent of the value of improved holdings could be 
secured at normal interest rates, and an additional 20-30 per cent on a second 
mortgage at a premium of from 3 to 6 per cent additional per year. In the inflated 
market of 1927 and 1928, however, the two mortgages frequently exceeded 100 per 
cent of the cost value of the property even at boom levels. 

The contraction of credit began with the failure of owners to meet second- 
mortgage charges which began in 1928. As rents declined, owners began to fail to 
meet even the charges on the first mortgages, which usually called for heavy pre- 
payments, and, as the first mortgages were foreclosed, the second mortgages were 
wiped out. After 1929 the outlying banks with their assets, including savings de- 
posits largely in real estate, were unable to liquidate on the dull and declining 
market, and the failure of 155 banks from October, 1929, to July, 1932, reduced 
their number to 45. These failures absorbed community savings, paralyzed business 
initiative in the vicinity, and rendered money for even conservative real estate 
financing unavailable. The banks and insurance companies still solvent passed from 
one extreme to another. Whereas in 1928 first-mortgage bonds were made for as 
high as four and five times the inflated annual income, in 1932 a first-mortgage 
loan could scarcely be made for over double the depressed income of a building in 
a good location. 

Thus the credit operations of banks have tended to exaggerate the extrava- 
gances of real estate booms and depressions rather than to counteract them. 

5. Sources of price information. Compared with the facility of the stock ticker, 
which flashes the prices of stocks to all parts of the United States within a few 
minutes after the sale is made on the floor of the New York Exchange, real estate 
prices stand at almost the opposite extreme. Moreover, instead of the trend in 
Chicago being toward greater publicity of real estate sales, it has been toward 
greater secrecy. In 1836, and even as late as 1873, auction sales, with the results 
published in the local papers, gave a reliable index as to values. From 1830 down 
to 1890 or later, the true consideration was usually given in the deed, which became 
a matter of public record, so that within a month or so after the contract was 
signed, the true price information became available. In the nineties, however, 
fictitious considerations became more common, and finally the practice was adopted 
of giving the consideration as "ten dollars and other good and valuable considera- 
tions." The real purchase price could be ascertained only by examining the sales 
contract, which was seldom recorded and which was usually kept secret. During the 
periods in which revenue stamps were required, from 1898 to 1901, from 1917 to 
1926, and beginning again in 1932, the reputed sales price could be ascertained 



APPENDIXES 447 

by counting the stamps on the deeds, but in some instances a number of stamps 
were added for the purpose of creating the appearance of high value when a bond 
issue was being floated. Another indirect method of arriving at sales values is to 
take the amount of the trust deed or mortgage and to assume that it bears a certain 
relation to the sales price. 

To obtain price information as to land transactions, buyers and sellers are 
forced to rely chiefly on the asking or listed prices given in brokers' offices, or by 
asking or advertised prices which appear in the newspapers in large numbers during 
booms. In the case of subdivider's property, the prices of the lots are fixed by the 
subdivider and are marked on each lot. The greater ease of ascertaining sub- 
divider's prices as compared with the prices of other lots is one of the reasons for 
their volume of sales. Another method of ascertaining the price is from a sign 
posted on the property, though these signs seldom give the asking price but only 
the owner's name and address. To secure all the asking prices of all lots in a neigh- 
borhood, it would be necessary to secure all the names of the owners from the tax 
records and to write or telephone to them, which is what the local brokers do in 
periods of activity. 

In view of the difficulty in securing information as to land values from sales 
records, George C. Olcott has performed a valuable service in his Land Values Blue 
Book of Chicago, which is published annually. These valuations, giving a front-foot 
land value for every block in the city and adjacent suburbs, lag behind actual values 
for from one to three years, but with allowance for this factor, they give a good 
approximation of Chicago land values. 

Because of the great diversity of lots in the Chicago land market and the long 
periods of inactivity, there is really no active and continuous market for all types of 
property. 10 Deals are seldom made without a good deal of higgling, and the first 
bid and offer is seldom the final one. As a result of the infrequency of sales and the 
many factors involved, land values do not advance or decline by minute gradations 
as in the case of stocks. In a boom land values that have remained dormant for 
thirty years may double, triple, and quadruple in a month. On the other hand, as a 
period of dulness sets in, offering land at slight or even fairly drastic concessions 
as against peak prices will not necessarily induce purchases. The beginning of a 
decline is concealed by the trading of one type of inflated equities for another, so that 
the parties are able to console themselves with the belief that they have suffered no 
loss. Real estate owners are the last to admit that their property has declined in 
value. 

The sales price of a tract of land covers a number of elements which are in- 
cluded in the sales contract. The usual terms call for the transfer of the property on 
the date the deed is passed, with all obligations paid up by the former owner to that 
moment, and with all income credited to him up to that moment. This is called 
"prorating." Thus the seller normally is debited with past due taxes and taxes for 

10 Harry Cutmore (Journal of American Institiite of Real Estate Appraisers, October, 
1932, pp. 17-18) says: "Sales of high type properties are few and scattering and the 
diversity between the sites of several fine stores or commercial buildings is so great as to 
limit seriously the usefulness of any sale as evidence of the value of every other site." 



448 ONE HUNDRED YEARS OF LAND VALUES 

the current year up to the time of conveyance, with mortgage interest accruing up 
to the date of conveyance, with janitor's salaries due or accrued, with accrued water 
or light expense, and he is credited with accrued rents, unused coal, and advance 
payments for salaries, water, and light. The balance between these items is added 
or subtracted from the cash down-payment. Thus there is a great difference, in 
many cases, from taking a deed to property "as it is" subject to unpaid taxes, inter- 
est on mortgages, etc., and taking property with all these obligations paid up to 
date. The fact that Chicago taxes for 1931 had not been in process of collection even 
in 1932 would mean that any transaction closed in 1932 would involve an allowance 
for the estimated 1931 tax and the pro rata share of the 1932 tax. 

6. Future relations of the parties. The relations between a buyer and the seller 
of real estate are frequently not terminated by the transaction as in the case of 
stocks where the seller receives all his cash for his equity. The seller usually takes 
a mortgage back from the buyer to secure the payment of part of the purchase 
price. Sometimes he sells this mortgage to a bank, but in many instances he retains 
it himself and collects interest and prepayments from the purchaser. If the buyer 
fails to meet the obligations of the mortgage, the holder of the mortgage note may 
file a bill to foreclose, have a receiver appointed to collect the rents, and in the 
course of eighteen months or two years regain title to the property. As a fore- 
closure is an expensive and lengthy proceeding, the mortgage holder frequently pre- 
fers to pay the owner of the equity for a quit-claim deed. In the case of a real estate 
bond issue, however, the holders of the bonds are scattered, so that the owner of 
the equity can seldom deal with them directly. The bond house that sold the bonds 
is the only one that possesses a list of their names, so they find it necessary to form 
protective committees which proceed to file foreclosure proceedings and appoint 
receivers whose charges come ahead of everything else. Complicated foreclosure 
laws nece